Welcome to the major leagues of debt. Collateralized debt obligations, almost always referred to as a CDOs, are horrendously complicated deals that often leave anyone without a MBA wondering what was put into these CDOs.

The first thing to understand about bonds, (aka debt) is that bonds are often backed by something else. Think about your home mortgage. If you don't pay your mortgage, the bank can take the house. You end up homeless, and the bank sells the house to pay off the rest of that mortgage. There is something "backing" that mortgage; something lender can fall back on, if you don't pay your bills like a good human being. That's called collateral.

CDOs are one flavor of an entire sector of investing called structured finance, and they are also backed. CDOs, in the simplest concept, are just bonds backed by something else. In most cases, a CDO is backed by a collection of various types of debt. CDOs can be home mortgages, or other types of debt like credit cards, auto loans, and personal loans. Most of these types of debt are usually considered a bit more risky and they don't have the backing that a home loan does. So, if you think it through, you can imagine that CDOs are usually considered a risky investment.

To take a step further, understand that CDOs have multiple flavors within each CDO. These flavors are called tranches. If you've taken French, you might recognize the word, it means "slice" or "portion." Each slice of that CDO you invest in is a little different and carries different amounts of risk.

You could invest in the lowest risk tranche of the CDO, which would provide you lower risk. But, you don't get a good return on that investment. Or, you can be the heroic adventurer of bonds and invest in the lowest-grade tranche of the CDO. You'll make an amazing return, but if the economy even looks at you wrong, you might lose the entire investment.

CDOs aren¿t easy, and are almost always invested in by mutual funds, insurance companies and hedge funds. As an individual investor, you will probably not come across a CDO you can participate in.

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Tuesday, June 17, 2008

Applied Industrial Technologies Earns a Gold Alliance Supplier Award from Vulcan Materials Company

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CLEVELAND, June 17, 2008 /PRNewswire via COMTEX/ ----For the second consecutive year Applied Industrial Technologies (NYSE: AIT) has earned the prestigious Gold Alliance Supplier Award from Vulcan Materials Company. Applied received this award for its services in 2007. The award is unique because plant managers at 175 Vulcan facilities rate suppliers on key operations criteria that include product quality, customer service, technical support, ease of doing business, and overall value added. Applied has received a Bronze, Silver or Gold Alliance award from Vulcan every year since 2000.

"Applied is honored to receive this Gold Alliance Award because it is based on a comprehensive analysis of our ability to deliver products and services to a large number of plant managers and customers across North America," said Tom Armold, Vice President - Marketing and Strategic Accounts. More than 200 Applied Service Centers provide Vulcan facilities with bearings, power transmission products, rubber products and specialty maintenance items, in addition to systems integration and technical assistance.

Pete Roberts, Director of Procurement for Vulcan said, "This award recognizes partners who have the largest strategic impact on our operations and Applied has consistently performed among the best of our suppliers; their commitment to customer service is excellent."

Vulcan Materials Company, a member of the S&P 500 index, is the nation's foremost producer of construction aggregates and a major producer of other construction materials.

With more than 445 facilities and 4,600 employee-associates across North America, Applied Industrial Technologies is an industrial distributor that offers more than 3 million parts critical to the operations of MRO and OEM customers in virtually every industry. In addition, Applied provides engineering, design and systems integration for industrial and fluid power applications, as well as customized mechanical, fabricated rubber and fluid power shop services. For its fiscal year ended June 30, 2007, Applied posted sales of $2.0 billion. Applied can be visited on the Internet at www.Applied.com

SOURCE Applied Industrial Technologies

http://www.applied.com

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