Each day I am amazed as to how many people out there truly think they can predict the direction of the market. I read investment articles and investment blogs each day where traders spend countless hours researching and putting together very good thoughts on the stock market. Some of these traders do this with a bit of success however most will dwindle back into obscurity before the next market cycle.

TAKE CAUTION - As I read most of these articles I really see no basis for making an investment with the exception that "this trader has a great track record". I try to remind everyone that investing is not picking stocks however investing should be based on a viable STRATEGY.

CONSIDER THIS - Convertible bonds have been around since the early Roman times when early entrepreneurs financed their ventures with convertibles. The recent innovation to this strategy has been a strategy known as convertible bond arbitrage. This strategy allows investors to benefit in the upside potential of a company without the assurance of a fixed income stream from the fixed income component. With a proper hedging technique, traders are able to take advantage of the downside of the underlying equity as well.

TODAY'S INNOVATION - In today's environment with the prolification of derivative securities most any trader at home can take advantage of this low volatility approach to investing. With the use of OTC options contracts, we can actually create a Synthetic Convertible Bond and then simply use the same hedging technique as the major hedge funds.

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