How to Buy Rate-Proof and Crash-Proof 8%+ Bonds

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If you take the mainstream financial media at face value, you might be under the impression that all high yield bonds are in big trouble with interest rates on the move.

Wrong.

The best bond portfolios haven’t actually budged since the recent market insanity began. Take, for example, our favorite PIMCO play. Its net asset value (NAV, the actual market value of its holdings) held steady while the stock market was dropping sharply:

What Crash? This NAV is Steady

The fund’s price, meanwhile, eased down 2.2% from peak to trough. But we shouldn’t confuse price with value – we should focus on the latter, which is a more accurate measure for investing profits.…
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Don’t be cheap when you buy bonds this holiday season (or ever, for that matter). Bargain shoppers, sadly, tend to be the most at-risk of outliving their fixed income portfolios!

But it’s easy for you and me to double up “regular” bond returns simply by swapping out popularity for quality.

Let’s walk through some of the most popular fixed-income plays today – and replace each with something that yields more (with superior price upside to boot).

The obsession with fees is understandable. Most investors are conditioned by their experience with stock-based mutual funds and ETFs to search out the lowest fees, almost to a fault.…
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You’re not the only one worried about high stock prices.

The lurking (and perhaps overdue) bear has other income investors worried, too. So let’s talk about the best buys for those of you worried about a stock market pullback of 10%, or 15%, or more.

We’ll start with some stalwarts from our Contrarian Income Report portfolio that weathered the last storm. Ironically (and probably fittingly) it happened off the bat – we launched our service, and the S&P 500 promptly dropped 10%!

No problem for us, though. In fact, subscribers who focused on their own holdings rather than the financial news may have missed the broader carnage altogether.…
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Closed-end fund (CEF) investors regularly go crazy. Their bouts with investment insanity often present us contrarian income hunters with 8%+ yields. And big price upside to boot.

But be careful, because these first-level types can be as greedy as they are fearful. It’s important to fade both of their emotional extremes for dividend security and price gains.

Today the mood amongst CEF investors is generally upbeat. Which means there are more “sells” than usual in a sector that should generally be greeted with a bit of skepticism (more on this in a minute).

However there are a few compelling buys today that are a retiree’s dream – 8% yields with, say, 30% price upside. We’ll get to those in a moment. First, let’s make sure you don’t own any overpriced funds. …
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About Author

Brett

Hi, I’m Brett Owens – and I’m a financial junkie. My “problem” started incollege, when I got a little dose of the stock market – man, was I hooked…in no time, I was reading the Wall Street Journal religously.

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