by Sammy the Chatting Chimp

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"After leaving the circus to make a better life for himself, Sammy the Chatting Chimp started his own exotic pet business and made a fortune. Now he wants to share the many facts and secrets he's learned, not only about business, but life in general."

Dear Mr. Chimp: What does it mean when someone ‘sells a stock short?’
--Fred Unger, Des Moines, Iowa

Dear Fred: Basically, it’s like taking a loan. A broker lends the stock to a seller from a firm's inventory. After the seller sells it, the profit goes into his own account to use for another investment. At some agreed-on point, the seller has to buy back the same dollar amount of shares and return them to the broker. If the value of the stock has dropped between those two transactions, the original owner makes a profit since he is being paid at the old price — thus getting more shares. If it rises, the original owner loses money. So it's really a form of gambling for both sides.  One of them is going to come up short! It's very different from how things are in the jungle. Animals never lend each other food for any reason.

Dear Mr. Chimp: What are commodities, and are they good investments?
--Eric Stanford, Cleveland, Ohio

Dear Eric: Commodities, or futures, are raw materials such as food, oil, precious metals, sugar, cotton, wheat, cattle and coffee that are used to make consumer products. There are a few reasons why commodities are a good investment. Over the past few years they've outperformed traditional assets such as stocks and bonds. Their prices have increased because of demand from emerging countries such as India and China, for commodities like steel and oil. Aside from large returns, commodities also offer investors greater portfolio diversification and a hedge against inflation: the rising prices of commodities are a cause of inflation! I was immediately drawn to the commodities market because my life in the wild made me accustomed to dealing with real assets rather than financial ones.