According to news reported by Amanda Lang on BNN’s SqueezePlay yesterday, Barack Obama says there are more bank failures to come. (He’s speaking of US bank failures, of course…)
Kevin O’Leary also said that the US bank deleveraging is going to continue for the next 2-5 years. This means it’s going to take quite some time for the economy to come back. But if you ask me, that’s going to be too late because by then there won’t be enough funds for social security and medicare, which all those retiring baby boomers are going to need in increasing amounts starting in 2012. It’s quite worrisome. I really don’t want the value of my investments inflated away.
Companies like Macy’s are sending signals that they’re repaying some of their debts EARLY so as to tell investors that “hey, maybe we’re not going to make any money, but at least we’re going to survive.” I guess that might be as good as it gets in today’s market for investors.
Now, you know what Kevin O’Leary’s been saying lately: BUY CORPORATE DEBT. But many people might find this complicated and not really understand why or how to do it (short of buying a mutual fund).
I should write a separate post on how to buy corporate debt. O’Leary’s basic idea is that in this market, you should *move up the balance sheet.* Companies, when in trouble, or anytime actually, have to pay people in this order:
-bondholders
-preferred share holders
-common stock holders
That’s why common stock dividends get cut first. “Moving up the balance sheet” means you stand a better chance of having your income remain where it is.
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