Bear CD

A bear CD is a weird flavor of a normal CD, or Certificate of Deposit.

Remember that the big buyers of normal CDs are grannies, grampsies, and Nelly Nervouses all around the world who just sleep better, taking no stock market risk.

CDs are extremely safe instruments and, generally speaking, essentially never have problems. That is, they pay off in full and on time, and we're guessing that your odds of being killed by a car crossing the street after you've gulped your double macchiatto from SBUX are higher. But in the case of a Bear CD, the interest it pays is pegged in a G-rated way to a market index. That is, the Bear CD might pay 2.5% annually while pegged to NASDAQ at 8,000. But for each 100 points that NASDAQ goes up, the rate of the Bear CD declines by, say, 5 basis points. So if NASDAQ went up to 8,100, the new rate, likely adjusted monthly or quarterly, would then become 2.45%.

Bear CDs are kind of a hedge against equity movements, all designed to make Nelly...less nervous.