By Rick Glaze

Volume on the stock exchanges was robust last week, giving the monthlong rally in stock more credibility. Chips led technology stocks higher as the Philadelphia semiconductor index marched ahead more than 2 percent. The Nasdaq ended its fifth straight week higher, rising 1.1 percent. The S&P 500 climbed 1.1 percent while the Dow Industrials moved up 0.7 percent.

Many investors are leery of investing in bonds because they simply don’t understand them. But bonds, sometimes called fixed-income securities, can be an important component of an investment portfolio. They have a fixed maturity and interest rate. You know what your income is and when they mature. The issuer is obligated to pay the principal back at maturity, so selecting a creditworthy issuer is critical.

Treasury bonds and obligations of the U.S. Government are considered the safest because if the government runs out of money, it can raise taxes to cover debts.

Bonds issued by financially strong corporations are used by many investors. The bonds issued by the state of California were among the highest quality rated in the country two decades ago. The dismal financial management of the state has resulted in a lower rating. California cannot simply raise taxes to pay obligations.

When revenue increases, large proportions go to programs, inhibiting sound management and reducing security for bondholders. Federal tax receipts have ballooned as a result of lower capital gains and dividend tax rates.

These tax cuts create an attractive landscape for investing capital. Invested capital creates jobs and prosperity for Americans.