What is your opinion on investing in the following 2 etfs?
April 2, 2009 by How Savings Bonds Work
Filed under High Yield Investing
Can you answer Janice C’s question about Bonds?:
KBE (Financial, but looks like it has some good banks, high yield)
XLP (staples seem like a safe bet in soft economy)
KBE (Financial, but looks like it has some good banks, high yield)
XLP (staples seem like a safe bet in soft economy)
Or should I keep my money it in cash and just let it sit there for a while and see if these go down?
Best High Yield Savings Accounts
Bonds Feedback: i like XLP but dont recommend in KBE.
Bonds Feedback: The high yield from banks probably won’t last much longer. Because the government is now forcing the banks to take on a lot of capital for which the banks will have to pay interest to the government. And if the conditions are too risky for lending. Then the banks will loose money either because they make risky loans and people default on them. Or because the banks will sit on the extra capital from the government without taking excessive risks and pay the interest to the government for the money that they can’t use.
And XLP is still quite high compared to it’s previous lows during the last recession. I think the present recession will be at least as bad as the previous one. And there is a good chance that XLP will go that low again. Perhaps then buying it might be a good investment.
But if the present recession turns out to be worse than the last one. Then buying XLP at its previous lows might still be a bad investment. Because XLP might go down a lot more and take a very long time to recover.
Bonds Feedback: Sounds reasonable to me if you have a 5+ year horizon. It’s similar to what I’m doing. You might also want to add something like SPY to add broad-market diversification.
I keep changing my mind about financials. There are good banks out there that are way undervalued. (E.g. WFC) But now the government essentially forcing them to sell them stock and who knows what that will lead to. I was starting to buy a small amount of financials but I decided to stop for now though I won’t drop what I have. I want to learn more.
Whatever you buy I’d personally start buying now (I am). But if you have a stack of cash I’d gradually buy over the next 5-6 months. I hope we’ve seen the bottom but certainly can’t guarantee it. You’re more likely to catch a bottom that way.
Follow my advice at your own risk! =) Hopefully I’ve given you some food for thought, though.
Bonds Feedback: Keep it in cash for the time being and let this trash market dump before you enter those. i got back in again too early today before the huge drop. i had to go to work. And stupid me, i thought a 400 point drop was already too much down for the time being.