Investors Can Benefit from High Yield in 2012 - MarketWatch (pressrelease)

 BETHESDA, Md., Feb 27, 2012 (BUSINESS WIRE) -- Investors may be well served allocating a portion of their portfolio to high yield bonds in 2012 to take advantage of attractive relative returns and to provide diversification to their investment portfolios, according to Matt Duch, Lead Portfolio Manager of the Calvert High Yield Bond Fund (CYBAX) at Calvert Investment Management, Inc. Mr. Duch cites the current low-growth environment in the US coupled with favorable fundamentals for domestic corporations as support for another year during which high yield returns may be attractive.
"Headlines, both political and economic, and trading technicals have led to increased volatility in the high yield market," said Matt Duch. "That being said, we believe a well- positioned, well- researched portfolio of high yield credits should outperform most other fixed income categories, albeit at lower than average historical yield levels. Our research is pointing to another year when high yield as an asset class should outpace most other fixed income categories."

"It continues to be an especially attractive area for investors looking for income at a time when interest rates will remain at very low levels," said James Lee, Fixed-Income Analyst at Calvert Investment Management, Inc. "The benefits of adding high yield credits to your portfolio can outweigh the added risks involved by providing higher yields, and the added value of having a well balanced portfolio."

"Several factors are pointing to a favorable environment for high yield in 2012," said Cathy Roy CIO of Fixed Income. "Historically low default rates bode well for the sector as does the generally sound condition of U.S. corporations. US companies also have been strengthening balance sheets by maintaining higher levels of cash and by refinancing debt, allowing them to withstand business or economic slowdowns. Another attractive aspect of investing in US high yield is the fact that the vast majority of issuers have little to no exposure to Europe and China, two areas of the economy that have been of concern to investors."

The Fund seeks high current income in addition to capital appreciation by investing in high yield issues in sectors that represent good relative values. These companies need to have strong cash flows, sound balance sheets and a history of paying down debt.

For more information about the fund and to obtain a prospectus, please visit www.calvert.com

Investment in mutual funds involves risk, including possible loss of principal invested.

High-yield, high risk bonds, which are rated below investment grade, can involve a substantial risk of loss because they have a greater risk of issuer default and are subject to greater price volatility than investment-grade bonds.

Bond funds are subject to interest rate risk and credit risk. When interest rates rise, the value of fixed-income securities will generally fall. In addition, the credit quality of fixed-income securities may deteriorate, which could lead to default or bankruptcy of the issuer where the issuer becomes unable to pay its obligations when due.

Avoid cash, load up on gold, says Marc Faber - MarketWatch (blog)

Marc Faber is to financial-market optimists what the Grinch is to Christmas. The Hong Kong-based investment manager and publisher of “The Gloom Boom & Doom Report”  doesn’t often like what he sees, and nowadays he finds even less to like about the world’s economic situation than he did in 2008 — as if that wasn’t bad enough.
In an interview with MarketWatch’s Jonathan Burton, Faber outlines five places where investors should put – and pull out – their money. Namely: avoid Treasurys and cash, selectively buy stocks, stick with emerging markets, and load up on gold.
Faber, also known as “Dr. Doom,” believes that Federal Reserve policy is stoking speculation over savings and debasing the U.S. dollar, hyperinflation is a real possibility, the stock market’s recovery since 2009 has favored the rich and powerful, cash is trash, and gold and land in the countryside are the only true safe havens.
“The Federal Reserve is a very evil institution,” Faber said with characteristic bluntness, “in the sense that they punish decent people who have saved all their lives. These are people who don’t understand about stocks and investments, and suddenly they are forced to speculate.” Read full story.

Revolution Investing: How to position your portfolio for this market -MarketWatch (blog)

This is a special free reprint of the current Revolution Investing newsletter published here on Markewatch.  You can also sign up for a free one-week trial of my independent trading diary with just your email address by signing up here.
The guys on TV say we’re supposed to be talking about the Standard & Poor’s downgrade of the U.S. debt. The newspapers say we’re supposed to be talking about Spain and Italy and whether or not the ECB, and the World Bank can redistribute enough wealth upward to the elite and bank shareholders and lenders that they “save” the E.U. Wall Street analyst reports tell us that the markets might or might not be pricing in a new global or U.S. recession.
And certainly, we do need to talk about these market crashes over the last week. But just how sure are we that these guys are focusing on the right things? That anybody’s even looking at the primary catalyst for this sell off?
I got this instant message last night at 1:00 am from a friend of mine in Iceland:

“These riots in london are scary … the youth is so self-centered and lacking of ethics and compassion. The same with the Norwegian terror attack in Oslo … Very scary and hitting home … You getting any news about this over in your end?”

She’s in her mid 20s and was active in stopping the bank bailouts in her own country. Iceland, to review, had a bunch of corrupt bankers who created and invested and gambled on a bunch of lousy mortgage securities and needed a huge bailout and drastic austerity cuts to their social services to avoid bankruptcy and default.
The youth in the country revolted and the markets and economy tanked for a couple quarters … and then the resurgence started. Turned out that when the country forced corrupt bankers and the government they owned out and allowed smarter, more ethical managers to take over that things improved. And fast. And now the Iceland government is already back borrowing from the global markets are low rates and the country’s economy is expanding once again.
This is a special free reprint of the current Revolution Investing newsletter published here on Markewatch.  You can also sign up for a free one-week trial of my independent trading diary with just your email address by signing up here.
Contrast that to the approach that we took here in Ireland and Greece. Where they propped up the bank shareholders and lenders with welfare money, allowed the banks to continue fraudulent accounting practices by institutionalizing them, kept the corrupt bankers and traders and managers and regulators in place, and allowed them to pay out record bonuses with that welfare money while making drastic cuts to generations-old social services. You know, sort of like the Republican/Democrat regime did here in the U.S. And like they did in England. And in Norway and every other country that’s allowed the E.U. to pervert its mission of uniting the currencies and countries to one of simply looting for the elite and banks.
And people are angry. And now they’re taking to the streets and doing exactly to the establishment what the establishment has started explicitly doing to them — looting.

Likewise, the average American is also freaking out over the news that the same guys who took out bin Laden were themselves killed over the weekend. One of the guys had recently told New York magazine that they had been ordered to take Bin Laden out from the beginning, in contrast to what the Republican/Democrat regime leaders had originally told us.
People, even those like me who don’t consider themselves to be conspiracists or even-conspiracy-minded, wondered about the way Bin Laden was killed and disposed of, and now this? It rattles people to the core that our own soldiers are dying. When heroes/elite soldiers like the Green Beret guys who were taken out this week are killed en masse in one ugly attack like this, it’s horrific.
The upshot of all this is that whatever the reason for this current trashing of our stock markets, it’s the kind of ethereal, intangible catalyst that is truly the hardest kind to work through. It’s not going to be quick or easy because solutions to all of these issues are not going to be quick or easy.
But all that said, let’s also look past these issues. Unless you truly think that both the U.S. and E.U. economies and therefore societies are about to implode upon themselves and that we are headed into a Great Depression or something worse, then we’re likely already closer to pricing all off these problems into the markets already.
More likely, the reactions to these issues — U.S. debt downgrade, flash looting, mortgage title anarchy, E.U./euro debt crisis, threat of recession, etc — will be yet more corporate welfare, monetary easing, tax tricks for the biggest companies with the best lobbyists…in other words, more bubbles.
We added a short on Wells Fargo last week and the stock dropped 25% in the next few trading days, as the broader markets also tanked (though not quite that badly!). Our many smartphone/tablet/cloud stocks from Apple to Google and Marvell also took a big hit. That said, I’d also outlined repeatedly for subscribers to TradingWithCody.com that I’d been buying Cisco calls aggressively on weakness heading into their earnings report last week, catching a near-20% pop in the stock and doubling/tripling the value of the calls.
But our overall positioning of getting long for a new tech bubble while getting short for collapsing banks and other sectors that would be insolvent without ongoing welfare has helped us wildly outperform the markets since launch.
That continues to look like the right positioning.
This was a special free reprint of the current Revolution Investing newsletter published here on Markewatch.  You can also sign up for a free one-week trial of my independent trading diary (where you get access to all my stock and option trades as I do them in real-time) with just your email address by signing up here.
Cody Willard writes Revolution Investing for Marketwatch and posts the trades from his personal account at TradingWithCody.com. At time of publication, Cody was net long Cisco, Marvell, Apple, Google and net short Wells Fargo.