Saturday, April 4, 2009


"For the first time in five years, more money managers believe that bonds look attractive compared with stocks, according to a survey to be released Wednesday. Sixty-seven percent of managers are bullish on corporate bonds, and 61% are bullish on riskier junk bonds, according to the latest quarterly Investment Manager Outlook survey by Russell Investments. ... Within stocks, fewer managers are now optimistic about US stocks than just a few months ago. Only 57% of the managers believe that the stock market is undervalued, compared with 72% in December. ... 'We're avoiding anybody who's reliant on debt to survive,' says Harry O'Mealia, president of Legg Mason Investment Counsel who wasn't part of the survey", Shefali Anand at the WSJ, 25 March 2009.

I disagree with O'Mealia. With the stock market down about 45%, managers are bullish on bonds? Highly levered companies should do well as "inflation" returns as long as they have lots of fixed-rate debt in their capital structures.

1 comment:

Anonymous said...

Leverage... inflation's friend... yes...