GlobalTrekker

High Yield Investments in a Crummy Economic Environment

Uhm, I don't mean to be disrespectful, but isn't it a little worrisome to take too close to heart subjective data-analysis from someone who owns PMF and HYG? PMF is trading at a +30% premium and leveraged 46%; in other words you own $9.90 worth of bonds for the $13.13 the fund costs, plus you own them with borrowed money. That's absolutely crazy. Probably the only thing supporting that fund's price is a short squeeze. Once the squeeze is over, this dog will crash. HYG is not as bad, but still...sheesh, trades at a premium, a pretty hefty fee structure for a bond ETF, an unsustainable 10.4% yield, and crappy casino debt and the like, all about to implode. I see this falling the same percentage as its dividend is going to fall, about 12%. I wouldn't buy junk now, and I'd trade my PMF in for KTF -- superior fund on every level.

Why I'm Lowering My Bond Exposure

Sifting away all the clumps of verbiage, bonds are way up, so they're not cheap, so sell them.

Of course, that does little for the grand majority of us who make fixed-income investments in order to receive income, more or less fixed.

Guessing treasury and mortgage rates is a more foolish enterprise. I, too, can tell you with absolute certainty that they will go up. That means nothing. The question is when, precisely. That is immensely complex, and beyond the expertise of any of us writing here.