The markets, reeling off of last week’s volatility spike, started up Monday massively when the European Union did their trillion-dollar backing/bailout. Then later in the week, the market began to sober up again.
It is difficult to know whether the markets will continue to be volatile or not, but last Friday’s trading action took everything down for reasons that are not entirely clear other than volatility and presumably a drive to safety.
I did not perform a single transaction last week, but continue to watch intently whether there is anything worth picking up. I still don’t find anything trading below a value worth considering and thus will continue to be patient. I get sufficiently rewarded by waiting and thus am not in a hurry to deploy cash.
I do note at present that the risk-free pre-tax long-term rate is around 3.9%, and if you asked me to cobble together a portfolio that would give a relatively stable and long-term income stream, I could probably make a balanced portfolio with enough diversification that would give around 7% in about half interest income and half eligible dividends over the next 20 years. Such a portfolio would be roughly half long-term corporate debt, quarter preferred shares and quarter equity. Stable income does not equate to stable capital, however – it would be highly sensitive to rate changes, and opportunity for appreciation would be limited. At least it would beat inflation.