Larry House

Consider Bonds As Part of a Diversification Strategy

I agree totally with the idea of adding bonds to the investment mix. I have always done this, and I went overweight bonds several months ago. I hold individual short-term bonds and a couple of funds. I think the fears of funds are overblown here. Most funds keep enough cash to take care of rountine cash-outs. Also, unless one carefully diversifies the individual bonds, a real problem can develop. I think individual bonds and bond funds are quite reasonable now, and they may just provide as much yield as stocks for many months to come. I recently put money in two bond funds managed by Bill Gross. They are PTTDX and HABDX. One of the attractions of these funds for me is that they are both heavily in cash. That means Bill Gross has billions to work with to pick up bond bargains as available. I am willing to hire him to do that instead of trying to pick my own. Some beaten-down CEFs that are worth a look are ACG, FAX, and HIX. The risk varies. Be careful out there.