I’m not saying corporate bonds aren’t risky, they are. If you can’t afford to risk capital loss, you should be sitting tight. But if you can afford the risk of investing in the private sector, bonds have better risk/return tradeoff than stocks which - I argue above - are still not cheap by historical standards and which are more vulnerable to panic. The majority of companies will not go bankrupt and will not default. Of course the trick is to find the ones that have good pospects for survival. But companies like Philip Morris (altria) and Coke and Pepsi paying 6% is a pretty good risk tradeoff for those who can take it.
Thank you for your kind words, I can afford some risk, but I happen to be one of those dumb shits who got out early, in 2007. In nominal terms not that much but haven’t lost much! So I gotta “be right twice”. The averages aren’t with me on that.
Back in Sept. and Oct., somebody at work was talking about certain junk bonds that were paying 30 and 40 per cent! Then I read that McDs CDS are considered a better risk than say, England, and I decided to forget it.
This, I think, is the crux of the problem (for anyone who has money after a market rout) - people won’t spend if they are scared, which leads to bankruptcy, which increases fear, more jobs go away, tax revenue, etc. Banks won’t lend, everything stops. I didn’t know this!!
I enjoy reading history - Years ago, nobody wanted equities except if they paid a dividend above and beyond what bonds were paying, or thereabouts. Now it is true that some GREAT stocks have never, ever paid a dividend, but that was the perceived wisdom after the “Great Depression.” The thinking was sound.