Quote

I sell these intermediate bond portfolios for people that can't go to stocks.

One day we will have more inflation, and our bonds will bleed like a pig. The only reason for buying long bonds is short-term or as a desperate haven for terrorized investors. But the potential to make longer-term real money is naught.

For investors who do want to speculate in high-yield bonds, one alternative may be a junk bond mutual fund, which can offer investors the relative safety of diversification.

Portfolio theory, as used by most financial planners, recommends that you diversify with a balance of stocks and bonds and cash that's suitable to your risk tolerance.

Too many investors overvalue companies in the near term while undervaluing them in the long term.

Both from the standpoint of stocks and bonds, an investor wants to go where the growth is.

The degree of leverage now being reversed is staggering, and the underlying global imbalances - notably between the savers and the spenders - will require long and painful adjustment.

For all your long-term investments, such as retirement accounts that you won't touch for at least ten years, you need a mix of stocks and bonds. Stocks offer the best shot at inflation-beating gains. But stocks don't always go up. That's where bonds come into play: They have less upside potential, but they also do not pack the same risk.

An institution that borrows on a non-prioritized basis would never contemplate borrowing on a prioritized basis. Doing so would undermine its standing in the bond market and suggest that it is not worthy of its strong credit rating. This type of self-imposed downgrade would materially affect its financial prospects.