Tag Archives: Vanguard Intermediate-Term Investment Grade Fund
In this month’s visit, I’ll show you how Alan Greenspan is unwittingly setting the stage for a big rally in bond prices, starting soon. We’ve seen his hardheaded determination to tighten credit before—and we know the result. Some high-octane Treasury bonds, I predict, will roll up a total return of 15% or perhaps even 20% in the coming year.
In this month’s visit, I’ll show you how to plot your course through these tricky waters. Greenspan seems determined to steer us perilously close to the shoals of recession, but we know how to protect ourselves. We’ve got ample reserves of bank CDs and bonds, and the stocks we’re buying are well insulated from economic shocks. (Two, in particular, look like great values right now, with potential for 20%–30% gains in the next 12 months.)
It’s an open secret. After five years of wrestling witha a stingy stock market, a lot of investors feel torn. But I would hate to see you miss out on the superb opportunities for long-term growth that are waiting to be plucked in today’s market. I’m talking about a small, select group of blue chip stocks so cheap that you’ll want to hold them for years and years.
No, it’s nothing like the good old panics the bond market used to treat us to, back in the 1980s and 1990s. But bond prices have taken a pretty good drubbing over the past four weeks. Even with today’s rally, the price of a long Treasury is about 5% off its February peak. Since early 2000, when the stock market bubble popped, every “correction” of 5% (or more) in bonds has ultimately rewarded investors who had the moxie to buy.
In this month’s visit, I’ll show you how to make the most of the opportunities, while avoiding the pitfalls. On the stock side of our portfolio, we’re concentrating ever more intently on low-risk names with high dividend yields—the ultimate badge of honor. I’ve got a new pick for you that has tripled its dividend in less than two years. That’s the kind of growth that will let you sing and dance through Wall Street’s periodic anxiety attacks.
Pssst! No, that’s not the sound of me whispering a secret in your ear. It’s the air hissing out of the teensy rally we’ve had in the stock market over the past week or so. I’m still hoping for more of a bounce in the next few days. The Democrats have wrapped up their convention, and it looks as if Kerry hasn’t gained much ground in the polls — if at all — against Wall Street’s favorite. With the GOP convention up next, Bush will now get a chance to regain some momentum.