Why are corporate bonds doing so well?

  1. ledefensetech profile image68
    ledefensetechposted 14 years ago

    http://www.investorsdailyedge.com/shoul … ffect.html

    Although the Fed can't seem to sell bonds to save themselves, corporate bonds are doing very well.  Why?  Well for one thing, as evidenced by the amount of insider selling going on, the stock market "rally" is about to end.  At about the time I figured it would, give or take a month.

    People got snookered again.  They saw "big name" companies like Goldman post record profits, but what most regular Joes and Janes didn't take into account is how Goldman made their money.  Banks make money by making loans.  If they don't make loans, they don't make money.  Simple.  Goldman didn't make money by originating loans, they made money by demanding the bailout money companies like AIG got.  Those were pretty much one shot deals though, don't expect them to be able to do the same thing for this quarter.

    Investing in corporate bonds could have an unanticipated effect.  Even in poor economic times, some firms will need to expand their workforce, production, etc.  Bonds are a good way to do this so this is one way in which people can not only protect themselves and their wealth, but can also help the economic recovery at the same time.  Still is isn't OPM, it's yours, be careful where and in what you invest in.

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