Batra & Prechter on Bonds

...continued from yesterday...

Bonds

Batra, page 171, “go with AAA corporate bonds, especially those of cash-rich companies”. He prefers municipal bonds to US federal treasury bonds. He says that a look at the past suggests that high-grade bonds generally appreciate during the first tow years of a depression, then depreciate for as long as six months before appreciating again and following the same pattern. He says sell your bonds by the presidential election …and then gradually buy AAA bonds of cash-rich companies or state and local governments in the second half the following year.

Prechter: says that generally speaking, it’s better to own high-quality short-term debt than long-term debt. The problem is ascertaining what is “high-quality” as bond ratings are not reliable.

...continued tomorrow...

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