The Medina Bond

Essay. The Medina Bond™ is an application of the Perpetual Bond™ applied to the world capital markets (equities only) that is similar to The Canada Pension Bond™ – 3% plus inflation, every year, no matter what, guaranteed (please see our Posts) – but it is designed to be sharia compliant in every way that we can foresee:

The Medina Bond™
“Inflation, Every year, No matter what”
Guaranteed

plus an optional, to be determined annually by the owners (please see below), share of  the capital gains and dividends that are earned by the underlying Perpetual Bond™ which is invested transparently in the capital markets of the world (which also determine a “rate of inflation”) using the mandated technology of The Perpetual Bond™ – “alpha-smart with 100% Capital Safety, 100% Liquidity, guaranteed, and with no fees and no loads on capital.”

We anticipate that The Medina Bond™ (like The Canada Pension Bond™) will have no fees and no loads on capital – after three months, for example, to discourage churning by ambitious salespeople or large corporate deposits that can’t get liquidity and “inflation plus anything” elsewhere – and that the expense of running the fund will be paid out of the earnings rather than the capital.

The intention, of course, is to help savers and investors in the so-called “third world” prepare for the hajj, a lifetime sacred duty of many hundreds of millions of people, but one also sees that sovereign funds will be exported before they are repatriated, and that the Bond effectively provides an off-shore, essentially electronic (with few offices), banking facility.

For example, if there are 2 billion people each with $1,000 (in some currency) to save or invest, then we have just $2 trillion to invest; and if another 2 billion people each have just $100, then we have another $200 billion to invest, so that’s less than $3 trillion to put into the global capital markets in equities, with no fees or loads on capital, and no commissions that are not paid from earnings.

There are no “technical” problems; only solutions already available and well-known. The hard part is administration, sales, and service for 4 billion accounts in some of the most inaccessible parts of the world, because The Medina Bond™ is not only sharia compliant, but it is also a world-wide “banking system” that for some people will deal with hundreds of millions and even billions of dollars as easily as it does for a few thousand dollars that are the typical lifetime savings of a farmer in Nigeria, or their “seed” capital for the next season, or a Hindu in India, for example, and, there are lots of people, governments, and organizations in the world that don’t ever want to see one of those, unless they own it.

However, it is quite simple to prevent ownership or domination by any one person, government, or company, by mutualizing it, as we did the first community insurance companies, so that the owners are in fact the depositors, and a reasonable way to enforce honesty among its agents is to insist that every agent maintain an escrow account of his or her own capital, also invested in the Bond.

To see what can be done, consider The Wall Street Put, March 2013.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond™
“Alpha-smart with 100% Capital Safety and 100% Liquidity”
Guaranteed
With No Fees and No Loads on Capital

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Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.