by Steve McDonald

Bond Market Update
If you are like most people, you don’t pay much attention to the bond market. In fact, if you are like most people you know less about bonds than you do about options.

You are missing one of the best opportunities to make money, very safe money, ever!

As everyone knows, there has been a mad rush into treasuries, prompted by the mauling the stock market handed us last year. So much money has flooded in that yields have dropped to near zero on some issues.

What you probably don’t know is the smart money has started moving out of treasuries and into corporate bonds, for a higher yield, as the fear of bank runs and national economic collapse fade from our memories.

The result is that corporate bond prices are moving up a lot, and will continue to do so as our fear of national default fades and investors move the enormous mountain of cash they have stashed in government bonds back into other higher yielding investments, corporates.

In just two months, I have watched investment grade corporate bonds move from 70, 80 and 90, to 100, 101 and 102, and as high as 107. This is just the beginning.

The opportunities in the bond market right now are tremendous. Six-month maturities can earn you yields of 6%, 7% and as much as 8% in investment grade, no junk. This opportunity is unprecedented.

Stock Market Update
At the same time, the stock market is being described as the best buying opportunity of our lifetime. Blue chip stocks with dividend yields of 5%. Intel, Microsoft, the best companies in the world at 52 week lows. All it takes is patience, and market discipline.

Here’s the problem. Most of the people reading this won’t budge. We are wired 180 degrees out of sync with making money in the stock and bond markets. In the 20 years I have been working with investors, they buy high and sell low and nothing I have ever done has changed that one bit.

Every pro I know is pouring money into the market. They are trading and building long-term hold positions and doing it at prices they probably will never see again.

This is the sixth market collapse/correction I have survived. In every one the sun seemed to be setting for the last time, people sold at the bottom and watched it run back up just to buy at the top again, and fortunes were squandered because of ignorance of the market. It will probably be the same this time.

In my experience in the markets it doesn’t knock at all, you have to have your door open and wait for it. This is the single best investment opportunity of your lifetime. Don’t screw it up.