Jackson

Here's what I mean.

If a stock and a bond had a baby, it would be a convertible bond.

It pays interest like a bond but can be transformed into shares at the bondholder's discretion.

For companies, convertibles are a cheaper way to raise cash.

For investors, they combine stock-style upside with bond-like protection.

Still, it's good to read the fine print.

Many of today's offerings come from AI-related companies.

That means the market leans heavily on a single trend.

If AI investment slows, those bonds could drop much like the underlying stocks.

And you might not get much cushion.

Fast growing firms often skimp on interest because investors are focused on the stock price payoff.

Less bond-like value means less protection from a stock-like fall.

Also, if lots of investors try to sell at once, losses could snowball.

Here's the bigger picture.

AI spending is driving borrowing across the board.

I'm talking convertibles, private loans, traditional bonds, and now a growing slice of the credit market now also hinges on the AI theme.

At the same time, higher trading volumes and more active hedging have made credit prices quicker to swing when sentiment turns.

So even if you've cut back on big tech stocks, you may be more tied to the AI boom and bust than you realize.

That's it for today.

I'm Jackson, and I'll see you tomorrow.