I just read a WSJ.com article that says the place to invest right now is in the credit market -- thoughts?
Answers
2222 points
readytoretire answered 10 months ago …
I agree. With the current spread, good corporate bonds have a better chance of total return than stocks do. The bonds have been so beaten down, that many company bonds are yielding way too much relative to their risk. As the market starts working normally again, the bond prices will go way back up and the current buyers will smile all the way to the bank. I think that buying bonds for a portfolio for the next two years is a good way to go. After that, the prices will be back up, so you may keep some of the higher paying ones, and cash out the others and go back into stocks.
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108 points
rnrinvest answered 10 months ago …
Did the article mention if you should be buying debt (bonds) or investing in the companies that are selling/refinacing thier debt. The top 4-5 banks relative to cash flow are a good place for now. Also depending on where you are financially (your portfolio value) and your ability to take on risk, mentally as well as financially, high yield corp bonds may offer some nice returns. Again obviously referring to stronger companies. Look into ETF's such as currency and oil/energy as well as metals/mining.
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3963 points
MNSL answered 10 months ago …
One has to be very coautious when buying debt now.
There is a chance some bonds can offer better returns than stocks.
Factors to consider when investing in credit and bond market:
There will be some corporate bankruptcies
Safer debts have lower yields
Only experinced experts can play Junk bonds correctly.
Expected higher high-yield-debt default rates in 2009
Some companies won't be able to pay their debts in 2009
Level of experience in debt market
At the end of this year, Treasury prices will depreciate
Pl see following link as well.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4218210/ The-bond-bubble-is-an-accident-waiting-to-happen.html
The bond bubble is an accident waiting to happen
The bond vigilantes slumber. As the greatest sovereign bond bubble of all time rolls into 2009, investors are clinging to an implausible assumption that China and Japan will provide enough capital to keep the happy game going for ever.
I think this is the time to invest in businesse what we know and in next rotating sectors.
