Yields are starting to look attractive

 Hi Readers

Markets seem to be trading all over the place at the moment. We are seeing bond yields increasing higher yet the Fed hasn't moved on rates yet. There is an old saying that the bond market is always right not the stock market. The bond market is like a cargo ship once it starts moving and the stockmarket is like a speed boat can move very quickly. 

For some of you who are retired a 5% yield for the next 10 years is a very attractive proposal. I'm not saying it can't go higher but you need to weight it up to your own circumstances. talk to your financial planners about locking up some money into fixed income and that's a comfortable retirement. but only if its something that interest you. I think we can go a little higher first around the 5.50-6%. I think that if we go higher than that then all hell will take place.

Just a note which is an illusion many believe will take place. Company buybacks will recommence next month and into December and many believe that stocks will have there Santa Clause rally. Previous years money was cheap and what companies did is loan money or issue bonds and then go into the market and buy their shares up. With government bonds at current levels companies need to pay a premium to obtain funds. While many have been beating the media drum about record buybacks lets see if they can obtain money first and at what rate. Some of the venture capital firms can't get money under 10% so there is no way companies I don't care who will be able to pay up and then buy there stock up.

To the Australian investors small cap stock who don't have there funding in order will struggle to find money moving forward. They will have to pay premium rate for money.

So before you look at investing in companies make sure you look at the financials and see if the company is financially sound. If not just wait for these companies to cap raise and then look into them.