By Susan C. Walker
When money market funds, mutual funds and CDs yield next to nothing, the old itch to find higher yields kicks in. That may be why Bloomberg has had a field day reporting on the latest attempts to find higher yields. For example, from an October 7 story: Private-equity firms are taking advantage of record demand for high-risk, high-yield debt to pay themselves dividends, saddling their companies with additional loans and bonds. … Shareholder payouts funded with bond and loan issuance climbed to $24.2 billion this year, more than triple the amount for all of 2009 and the most since the Standard & Poor’s 500 Index peaked in October 2007, according to S&P’s Leveraged Commentary and Data. (Bloomberg, 10/7/10) The yield may be high today, but Robert Prechter warns that it’s a dangerous game to play. He sees it as tomorrow’s next investment disaster. Read more
