Jan 2009: A Strong Move to High Yield Bonds

Hi

 

We're all happy that 2009 is here.  To start the year off right we are making to changes to our investment strategy.

 

Strategy 1: Buy High Yield Bonds (and HY Bond Funds) 

HY Bonds with medium to long durations will do well this year.  Currency devaluation, inflation and artificially low interest rates all work in favor of High Yield Bonds.  We expect strong double-digit returns this year.

 

Strategy 2:  ONLY Buy Stocks Paying DIVIDENDS 

Due to the TARP funds ($700B bailout), the US Government has set a de-facto standard for equities: 8% yield.  Most of the government money is buying PREFERRED SHARES paying 8% each year.  Most stock investors DO NOT get 8% annual income from their stock.  Based on the continued government involvement, new market regulations and general economic slowdown; we recommend that any NEW MONEY investment in equities, should go to PREFERRED SHARES and DIVIDEND PAYING stocks.

 

P.S.

Oil and clean energy/green technology are going south this year, due to extremely low global demand.  Slow global economy means low oil consumption. This reduces payoffs for clean/green technology.  We'll monitor this situation and provide updates in March 2009.

 

Thanks
 

Victor Lloyd Smith

Millennium Lyon Asset Management

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