2012 Outlook for Bonds

11/28/2011 12:01 am EST

Focus: BONDS

Marilyn Cohen

President & CEO, Envision Capital Management, Inc.

The 30-year bull market is getting long in the tooth. Rates have stayed incredibly and artificially low and will probably remain low throughout 2012. The reasons are numerous and the after shocks?who knows?

The really big money in bonds was made over the past three decades. But don't despair. There are still ways to make outsized yields. Now it's more about methodically, carefully, and unemotionally taking credit risk. That is, investing in corporate bonds with split ratings and tippy-toeing into specific high yield bonds issued by companies whose balance sheets look good, whose management is thoughtful and respectful of bondholders. The list isn't lengthy but it's interesting and noteworthy in today's low yielding environment.

Are there risks? Sure. There are risks when investing in anything other than US Treasury bonds. But the risks are quantifiable?and that's just what investors need?to be able to quantify their bond risks.

The Eurozone, US economy, stock and currency market unknowns should not immobilize investors?that won't make you money. Making money in 2012 will be challenging but it is possible.

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