Quote:
Originally Posted by MoneyGuy
I haven't contributed to this thread for a long time but thought I'd poke my head in and alert you guys to the terrific opportunity right now in high-yield bonds. When HY spreads are over 1,000 bps the returns on these bonds tend to be extraordinary and over the last three times these spreads existing HY bonds have substantially ourperformed equities. Actually, high-yield bonds are almost equities anyway. If anyone wishes, I could provide an elaboration on this as I have lots of research on this topic.
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I just wish I had a dollar for every guy coming to my office to peddle junk bo errr...I mean high yield bonds. I am admittedly leery of these and definitely low in terms of both my portfolio as well as my clients. I can't help but think that there is going to be a point where you have to make some quick trades and get out right before all of the defaults?
Quote:
Originally Posted by macker
Regarding US differing from Canada : US Banks were leveraged 40-1 and CDN banks were 1/2 of this amount so you can't even compare them.
http://seekingalpha.com/article/1378...oment-to-shine You have to give CDN banks credit  . Also our broader economy is based on things that the world needs and are found in the ground/grown etc. and this will distance our economy from the US in the years ahead.
Corporate bonds : There is a huge appetite for corporate bonds right now and they are selling out just as quick as they are putting them out (see recent offerings from Lowlaws, Teck Resources etc.). Many people are realizing that they were light on bonds prior to the credit crisis and are adjusting their portfolios accordingly. I don't have any but I am aggressive here. I guess you could use your age to tell you what percentage of your portfolio you should have in bonds? |
You're right on this point. Unfortunately this is where investor psychology is doing people in. The time to be into bonds was last year at this time (not specifically into high-yields, just good ol' fashioned debt instruments..US denominated if possible!). Now that people have been burned they are making the age-old mistake of getting more conservative at the bottom or thereabouts.
As I posted somewhere in one of these threads there are/were some amazing bonds out there with great guaranteed returns (9% plus). I'm far from a guy who would not invest in bonds. I just think that if you thought that RIM or Encana was a great deal at this time last year, which a lot of people obviously did, you have to be enamoured with them for 1/2 price!