New financial world

I just met a friend who is a very big money manager & asked him how he's sleeping. He said he's not sleeping so well. OK!

Last month I was talking with my friend about her IRA & its investments. She asked about investing in a company that would benefit from growing economies in Asia. These aren't the actual words as she's not familiar with investments, but you get the idea. I told her Caterpillar (CAT), a Dow stock, was an excellent investment (shown in my Yahoo badge on the right). They have a very good long term record of growth & are expanding rapidly especially in China. She wanted to know why I didn't buy the stock then. While I like the fundamentals, I said my expectations were for lower stock prices. At that time it was in the mid 60s, today it's 39. All this in a month!

CAT is an excellent company & should do well going forward. This is the type of company Warren Buffet would like. But investments are in a radically new world where everybody needs to rethink priorities & values. I think dividends providing excellent yields will be increasingly important as short term rates are being taken down to very low levels. Some securities with very attractive yields deserve more consideration. Junk bond funds, REITs & MLPs all have yields with many into double digits. Even ordinary industrial & service companies with excellent track records can be found with 3-4+% yields.