Companies with Split Personality Lead to Different Investment Results

This chart shows the price of a bond for Genworth Financial over the past year (8.625% maturing 12-15-16 cusip 37247DAL0), during which time the price has increased approximately 10%.

I am highlighting these charts because this is an excellent case of a investment split personality (This is when the stock prices and bond prices of a company move in opposite directions.)

Stock holders tend to look at the future growth of a company and when the projected growth fails to meet expectations, then stock prices head lower.

Bond holders tend to focus on will the company survive and have the ability to repay the bond at maturity. A company doesn’t necessary need to be growing in holder to keep bond holders happy and bond prices about $100, it just has to reassure bond holders that it can generate enough cash to pay them back.

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