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Troubled Investing

After hearing that Caterpillar had to pay a lot to raise capital in a bond sale last week — paying 3.25% over the rate for U.S. Treasuries — I suspected there might be an opportunity in corporate bonds. The banks are illiquid, but I'm not, so maybe I can make some money here.

There are probably few things more dangerous than a novice bond investor wish cash in his pocket. Fortunately I won't have to learn this lesson the hard way. I started looking at bonds and discovered that the high yields among "investment-grade" bonds are all in the financial sector. And oh my, are they high! When I see bank bonds with double-digit yields rated as A1/A+, I know I'm looking at craziness. Nothing looked attractive at all. (And a company like Caterpillar isn't attractive either; it just got me interested in the idea.)

With savings account and CD rates so low, and with a bailout plan on the way that will devalue the dollar, I'm looking for someplace to go. My glimmer of hope in bonds got crushed, and both stocks and precious metals (except for gold) have behaved poorly this year. Something ought to be cheap right now. I'm just not sure what that is.

Maybe I should give up and buy expensive toys while my money is still worth something.


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