Posted on 23 September 2011. Tags: high yield corporate bonds
Today’s maddening market environment has traders everywhere looking for safe, but nevertheless profitable places to park their money, and the answer to this dilemma would seem to be found in high yield corporate bonds. After all, everyone who reads the financial pages knows that corporations have been making record profits due to their extensive efforts at restructuring. This means that blue chip enterprises are lean, well-managed, well-capitalized, and therefore unlikely to be a bad investment.
Even as large industrial companies amass piles of cash from their ongoing operations, they nevertheless remain subject to a series of hair-tearing price swings on account of general concerns over the world economy. Since these external factors have rendered corporate stocks unreliable until conditions ameliorate worldwide, prudent investors are turning towards corporate paper as a solid, but still high yield corporate bonds, vehicle for keeping their money at work. Even as they lock in guaranteed income streams, they simultaneously insulate themselves against irrational market moves that could wipe out their principal through some Black Swan event.
Of course much money is moving into wealth preservation assets such as gold and US treasuries, but these investments are pure wealth preservation plays that offer almost no return at all. High yield corporate bonds offer a medium investment path that splits some of the difference between safety and profitability. Not every investor can simply give up the monthly income which they have come to rely upon to cover their monthly bills in the face of an uncertain world economy. Bills still have to be paid. Particularly for retirees, high yield corporate bonds can keep the cash flowing long after their days of high risk wheeling and dealing are behind them.
© 2013 StockRockandRoll, LLC | All rights reserved