From the Auther’s point of view, an ideal investment vechicle is one that will repay income and principle in units of the same purchasing power as was originally invested. As far as we know, this kind of investment does not exist.

To quote,

“It is not hard to see why it should be merely a theoretical formula. Nothing is safe; nothing is sure in any field of life. Specifically the wealth of the world does not increased fast enough to allow payment of compound interest or pyraminding of profits on existing “invested captial”. Every so often adjustment are made partly through bankruptcies and other scaling down of obligations and partly through deprecation. And it’s all as old as the hills.“

I find this passage specially relevant to the current sub-prime crisis. An triple A rating from a rating agency is never a guarantee of performance.



Quick link to The Battle for Investment Survival by Gerald M. Loeb