PODCAST: Investing for Income with Jeffrey Kosnett
Cold, hard cash working from home! No, this isn’t a scam — it’s an investing strategy built on bonds, REITs, preferred stocks and more.
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Links mentioned in this episode:
- Resist the Impulse to Buy These 14 Holiday Gifts
- “Investing for Income,” Kiplinger’s Personal Finance magazine column
- Kiplinger’s Investing for Income newsletter
- Don’t Overlook Preferred Stocks
- Stay Above the Interest Rate Fray
David Muhlbaum: Everyone wants to make money on their investments, but some of us are a bit more focused on income. Does whatever we buy pay us back regularly with interest and dividends? You know, cash, not just paper gains. That's investing for income, and we'll talk today with Jeffrey Kosnett, who has covered this sector for decades.
David Muhlbaum: Welcome to Your Money's Worth. I'm Kiplinger.com Senior Online Editor David Muhlbaum, joined by my co-host, Senior Editor Sandy Block. How are you doing Sandy? Did you have a good Thanksgiving?
Sandy Block: Sure did. Got together with some family for the first time in a couple of years, so it was very special.
David Muhlbaum: Good, good. For a number of reasons, we have delayed ours to today, Friday. We just needed a little extra time to get everyone here and get ready, and it turns out you can just do that. I mean, I guess I'm violating the sanctity of Black Friday or something.
Sandy Block: Well, you're also working on a day off. We're both working on a day off.
David Muhlbaum: Well, yes. I mean, notably Friday, Black Friday, is not a day off for the stock market. They have a short day to trade and, my, they took full advantage of it. The market sold off like crazy over these fears about a new COVID variant. I think it already has a name: omicron.
Sandy Block: Oh, joy.
David Muhlbaum: Yeah. Red Friday? The stock market was only open for four and a half hours and it still managed to lose 2.5% to close at 34,899. That was its worst day of the year.
Anyway, a few quick thoughts about Black Friday, and a holiday shopping season that's still unfolding, before we get to our main segment, which is about income investing, and kind of long.
Sandy Block: But worth it. And Black Friday will be over by the time anyone hears this.
David Muhlbaum: Well yeah, that's true. But the reality is, Black Friday began before today too. Come on, the whole thing is an artifice. And obviously, every year retailers spend a lot of time and money on consultants, trying to figure out when to introduce discounts, how much those will be, and then when they're going to roll them out. And then we, as journalists, or something close, try to figure out how to translate those into the most savings for the customer. That's the guidance. And what comes out of that are these lists and slide shows and all sorts of other fun things that we post online, that I'm not going to recite here, other than to say, "Well, we got them." But the main takeaway that I can pass on is that the watchword in this year's holiday shopping season seems to be scarcity.
Sandy Block: Right. Supply chain problems.
David Muhlbaum: Yeah. Those are three words. I mean, we've heard that phrase a thousand times by now, but when it comes to actually fulfilling people's holiday wish lists, it's going to matter.
Sandy Block: So the idea of waiting for a better price is riskier than usual this year.
David Muhlbaum: Yeah. In short, yeah. I mean, I think the best advice is to do your research. Not just whether whatever items you're thinking about are going to be in short supply or not, but to check with your recipient, how much they really want this or that. And maybe you'll go ahead and buy this right now at full price, whatever, and you'll wait on buying that to see what happens. It kind of depends on how much they really want it.
Sandy Block: Which works pretty well. But what if your recipient thinks all presents come from Santa Claus? You're going to have to make up a story about Santa having a shortage of container ships.
David Muhlbaum: Yeah. I hadn't even thought about that. It's been a long time since my kids believed in Santa, the Easter Bunny, or the Grinch. Yeah. Anyway, let's move on to our main segment: income investing with Jeff Kosnett. We'll be right back.
Investing for Income with Jeffrey Kosnett
David Muhlbaum: Welcome back to Your Money's Worth. For our main segment, we're joined by Kiplinger Contributing Editor Jeffrey Kosnett, who is going to give us some insights into income investments. That's a topic we haven't given a whole lot of attention to here on Your Money's Worth, but it's a huge investing sector and one that Jeff has deep experience with. So welcome, Jeff.
Jeff Kosnett: Hi, thank you for inviting me.
David Muhlbaum: Yeah. Well, Sandy and I have a lot to learn. I mean, I know it will be educational for the two of us, and I hope the listeners will benefit in the process. Now, to clarify a bit about what Jeff does and what Jeff knows, we're going to need to talk about a phrase that I'm sure we're going to repeat a lot today, and that is the three words: Investing for Income.
Now, since you can't see capitalization or italics in podcast-land, I'm going to try to explain that investing for income means three things to us.
First of all, it means the behavior: buying bonds, certificates of deposit, and yeah, some stocks, with the goal of steady and hopefully generous payouts.
David Muhlbaum: Second of all, “Investing for Income” is the name of a column that Jeff writes for Kiplinger's Personal Finance every month. I'll put in a link.
Thirdly, and this is the big one, both for Jeff and his audience, is Investing for Income, the newsletter. And this is a monthly deep dive into all things fixed-income. Has a massively loyal following, strong subscriber base. Yes, that Income for Investing costs money to read. And I know Jeff isn't the only one who'd say it's worth every penny. So, how long have you been with Kiplinger, Jeff?
Jeff Kosnett: 40 years. I started at the end of 1981, and I think that really makes me a unicorn to have spent basically my whole life with one organization, and I'm very proud that I have.
Sandy Block: Well, and we're real lucky to have you, Jeff. And I think the fact that your experience shows so often in your column in your newsletter, in that very often, when you say something is going to happen with interest rates or bond yields or anything like that, you're usually right.
Jeff Kosnett: Well, thank you very kindly. I appreciate hearing that.
David Muhlbaum: Yeah, and I like unicorn. I, who have been with Kiplinger for quite a while too, generally refer to myself as a dinosaur. But you win in terms of years. So! And when did you launch Kiplinger's Investing for Income, the newsletter?
Jeff Kosnett: Okay. It first appeared in the world in August of 2012. So we have now completed, what, it looks like 10 full years of publishing. I prefer to say that we have now done 113 monthly issues, and many more to come.
David Muhlbaum: Not that we're counting. Okay. And about how many subscribers do you have?
Jeff Kosnett: Don't hold me to this exactly, but it fluctuates between 15,000 and 17,000. And we're always hard at work trying to get more.
David Muhlbaum: Yeah. And they ask you lots of questions, right?
Jeff Kosnett: They do. I have a very long and deep inbox of email questions. I get about two of them a day. And I get a few more than that when the newsletter reaches the subscribers and they read it and then they immediately have questions or observations related to what they just saw.
Sometimes it's as simple as saying, "Well, I'm glad that you like this strategy or this fund or whatever because I've owned it for a long time, and now I have a second opinion." Other times they say, "Have you thought about this idea? Or why have you overlooked this fund? Or why won't you suggest that people do this?"
And then I will reply. And oftentimes, it's because it's too risky or it's untimely. And I make every effort to treat everybody with total respect. And I think that Kiplinger, as a company, has always put a priority on reader service and I'm proud to continue that.
Sandy Block: Yeah, it's very old school. And Jeff, as someone who used to sit on the other side of the wall from you when we were in the office, I am well aware of how much time and patience you spent with your readers. It was always very impressive. And as you said, treating with respect because, as we know, calls we get aren't always respectful. But you were always extremely respectful and patient, and loud, because some of your readers didn't hear too good.
Jeff Kosnett: Yeah. Thank you. One thing about Investing for Income is it does appeal to an older audience.
Sandy Block: Yes.
Jeff Kosnett: So I have readers who are literally in their 90s and yet they want to talk about long-term investment strategies. And I have had people 95 years old who say, I want to buy a 30-year bond. Good for them. I hope they're around to see it mature.
David Muhlbaum: That is optimism. Yeah. And on a note about the old-school communications, I'd like to remind people that we take questions too. The email is email@example.com. And we will repeat that and tell you more ways to stay in touch with us at the end of the show, in case you have questions.
Jeff, you've touched on the question of the demographics of your audience being a little bit older. But the reality is that a lot more people have fixed-income investments than are maybe even aware of it. And so, while the profile of the fixed-income investor is somewhat true to the stereotype of the pensioner, a lot of younger people have these fixed-income investments through a 401(k) or another retirement plan.
Now, maybe they own bond funds in those 401(k)s. And maybe those bond funds are themselves in a target-date fund, which that's a product we've talked about here. And so the ultimate owner, they're really distanced from the actual individual security. It's like the bond is somehow in a bunch of shells, like some sort of matryoshka doll. But in some way, right, that 401(k) investor is in some distant way tied to some bond issued by Lake County, Illinois, that pays 1.5% or whatever.
Jeff Kosnett: That is true. And through a mutual fund or through a 401(k) or through a pension fund, everybody is invested in bonds. But I would like to clarify that when we talked about Investing for Income, which, as you said, was the title of our newsletter as well as my column, we're not only talking about bonds, we're talking about many other kinds of investments, from oil wells to dividend-paying stocks, to preferred stocks, to financial intermediaries, mortgage companies who pass through a lot of interest income or dividend income. And that income is not fixed. You are not locked into collecting 1.5% for 30 years. You may get a growing dividend from a growing real estate company that is every bit as much of an equity investment as it is an income investment.
So the categories that we cover span a really wide range, and that appeals to people and investors and savers of all ages, not just your 90-year-old retirees or your 65-year-old who is wondering whether or not he has enough money to step down from his job, this sort of thing. So our field is extremely varied and highly interesting.
David Muhlbaum: That's a good point about the shorthand we should be using. I guess probably we should not be using the shorthand, fixed-income. We should be using the shorthand, as we talked about it at the beginning, investing for income, to reflect that range of asset classes involved.
But let's be frank. You say it's really interesting. And a lot of people do find it really interesting. And some people, I know some of them because I work with some of them, find it boring.
Jeff Kosnett: Yes.
David Muhlbaum: They just want to talk about stocks.
Sandy Block: GameStop.
David Muhlbaum: Yeah, a little bit GameStop. But what's going on there? What is up with that? Why do people tend to think of this as boring?
Jeff Kosnett: Well, first of all, bond math is just boring. It's finance, it's numbers, it's formulas. It's the net present value of a future stream of income, which translated means if you make an investment today and you know you're going to collect a thousand dollars in interest over the next 10 years, what's that really going to be worth? So, that is dull.
However, there are many, many people I have met for my 40 years in this business who find that the challenge of finding an unexpectedly good value somewhere in this field or finding a preferred stock that is priced to yield 8% when the company's paying only a 2% dividend, is really, really, not only challenging, but when it works, boy, you feel really good. And while everybody and their brother and their sister and their kids and their grandfather is trying to find these hot stocks, very, very fewer people are out there trying to find some of what I look for, and that's an advantage today.
David Muhlbaum: So Jeff, you brought in a term there; you brought in preferred stocks. So as I mentally promised, let's talk about what each of these things is as we bring them up. So can you give us a quick explainer: What the heck is a preferred stock?
Jeff Kosnett: A preferred stock is a combination equity and debt instrument that banks, real estate companies, and occasionally utilities or industrial companies issue. And it is sort of a bond in that there's a coupon rate, and it's usually a fixed rate, like 6% or 7%, that you get every year.
But it's also an equity because you are not guaranteed that you are going to collect this money if the company runs into trouble. So it's kind of in the middle. It's not quite as risky as a common stock, it generally pays more, but you are behind the bond holders when it comes to the pecking order of creditors, if indeed the company runs into trouble.
David Muhlbaum: Got it. It's the right bowl of porridge in Goldilocks' scenario. But it, on the face of it, 6 or 7 percent’s, pretty good. No?
Jeff Kosnett: Yes, it's really good. And especially when you have not only low interest rates on bank deposits, but with the possibility of higher inflation. And we're now talking about hyperinflation or 1973-style inflation. But if inflation settles in at 3 or 4%, a 6% coupon bond or a preferred stock or anything is going to be something that more and more people are going to want to own.
And the economy's doing well. Nobody's worried about companies en masse going bankrupt. Many of these preferred stocks have good credit ratings, investment grade, and they are highly prized by a lot of people. And a lot of money is entering the handful of mutual funds that invest in them, so right now they're in their moment.
Sandy Block: So Jeff, I mean, I think to me what's very interesting about your column and your newsletter is that a lot of people do think bonds and they think buying a 10-year treasury or maybe... David, I think, the other day found a certificate for a Russian bond in his basement. An actual bond. But I think what you recommend is that people in general shouldn't actually buy a bond. And maybe this refers to preferred stocks, too. You can clarify. They're better off getting a fund? Can you talk about that?
Jeff Kosnett: Yeah. I think people should have some of both, and it varies for many reasons. First of all, if you're just starting out or if you're building a position over time and you don't have a lot of cash to put in, obviously, you can send $3,000 off to Vanguard and buy a total bond market fund, and then you don't have to worry about the minimum it takes, generally, to buy a bond from a broker, which is going to be $5,000 or $10,000.
But there are certain classifications of bonds that are very difficult to understand and to manage, such as high yield bonds. Preferred stocks are sort of are in realm, international bonds for sure, where you really do need the expertise of a professional management team, as well as a trading desk. Mutual funds are a partnership between a manager and a trader and some analysts, and they're out there looking for good bonds to buy at good prices.
So when it comes to anything other than a plain vanilla, like your local school bond, which is certainly safe to buy, I like active management of bonds through either funds or sometimes through ETFs, which are exchange traded funds, or closed-end funds, which is another variety of investment company.
Jeff Kosnett: But for somebody who is really experienced in this and is willing to hold the bonds for a long time, it is a good idea to own some individual bonds` for this reason: When interest rates are rising or inflation is a worry, and remember that it doesn't matter what the actual inflation numbers are, it matters what the psychology of the markets is, a bond fund may lose value, whereas your ordinary bond, it may lose value on paper, but you know that when that bond is ready to mature in 5 or 10 or 20 years, you can get back your original principal. So it really doesn't matter what the bond market does.
And meanwhile, you get paid your semi-annual or quarterly interest payment. So holding a bond itself kind of shelters you from the day to day volatility in the financial markets, and that's why a lot of people like to own individual bonds.
Sandy Block: So Jeff, you mentioned inflation, and that's all you hear about now. The inflation rate is expected to top 6% for this year. Based on my knowledge of the bond market, isn't inflation the Darth Vader for fixed-income investors? And what should they do about it?
Jeff Kosnett: Well, you're right. Inflation is public enemy number one or Darth Vader or whatever of fixed income investors, to the point that if you own a long term, say a treasury bond, that is going to give you a yield of one and a half percent, and inflation runs 6% during the life of that bond, obviously you have lost a lot of purchasing power. The humiliation is, in addition to that, you have to pay taxes on that interest income, so you're really going to get hit.
However, in my way of thinking, and I've written this and I've said it on television, there are several ways to look at inflation; and one is consumer inflation and the other is what I call bond-trader inflation. And that explains why, despite the fact that you're seeing all these headlines and you're going to get bombarded with how much it costs to buy a turkey and things like that, interest rates have stayed low and most bonds have either held their value this year or even gained in value. It's because the financial markets don't think this is a long term reality and a terrible risk.
Jeff Kosnett: And I kind of agree with that. I have been reading, since the end of the 2008 recession, that interest rates were supposed to, quote, and I use a little bit of jargon here, "normalize," which means get back to the levels that we all remember when we were kids: 4%, 6%. And also that you were supposed to go back to the world where, if the inflation rate was 2%, a bond would always pay 3 or 4 percentage points more, instead of the reverse of that.
Well, those days have changed. That ship has sailed. We have a doctrine called lower for longer, and I am still convinced that by this time next year or even sooner than that, everything will be back to roughly where it was before the pandemic and that this current burst of inflation hysteria will ease. People, of course, who get socked with it in their gas pump don't believe it, but it's true.
David Muhlbaum: Okay. That is a bold prediction and I think what we now know is that we're going to invite Jeff back here next year and see, "How'd it hold up?"
Jeff Kosnett: That's right. Yes. I've said this before, and I've been right for many years. And I could be wrong, but there's been a lot of inflation scares for a long time and nearly all the time they go away.
Sandy Block: So Jeff, does that mean, and I hope I don't get in too much jargon here, but there's been a lot of talk about investing in fixed-income investments that offer protection against inflation, such as treasury inflation-protected securities, or even I bonds. Are you saying that maybe people don't necessarily need to go there?
Jeff Kosnett: No. And right now they're a good deal, especially those I bonds. Because of the quirks of the way that the government sets the rates on some of these things, you can get, I think, 7.2% for the next three or four months on an inflation-linked savings bond.
And my observation on that would be: the government limits us to, I think, $10,000 a person. And that's a good thing because if the whole world, which owns 20 trillion or whatever it is of American debt, were to sell all their 1% bonds and buy these 7% bonds, well, I think you know where I'm going with that.
Sandy Block: We'd go broke.
David Muhlbaum: Yeah, I think we'd basically be subsidizing it at that point.
Jeff Kosnett: Yeah. Yeah. But there are other investments besides government securities that have some of these protections. One of my very, very favorite places to put savings is something called a floating-rate bank loan fund. This is a municipal or a taxable fund that owns participations in bank loans to corporations and other borrowers where the interest rate on these loans resets constantly, sometimes even overnight, but usually every quarter or every year.
So this is like a variable rate fund. It's generally going to pay you 3 or 4 or 5% as it is, and if inflation were to drive interest rates higher, these rates would float upwards. So this is a good way to protect your savings against what Sandy was just describing.
David Muhlbaum: Jeff, I want to check in about some of the operational approaches to investing for income. And we talked about a 401(k) investor having essentially exposure to this kind of security because they probably own a bond fund. And I would imagine the next step up for them would be to, well, start paying some closer attention to which bond funds and which ones you're recommending. Because they usually have a choice within their 401(k), they could start being a little bit more proactive about that.
But just the idea of buying an individual bond, as you posited, in a world where I can buy and trade stocks from my phone on Robinhood, how do I actually go and buy that Lake County, Illinois bond? I mean, where would I start?
Jeff Kosnett: It's not that hard. If you have an account with a brokerage firm like Fidelity or Charles Schwab or any of the other big ones, they will have a bond desk, just like they have a stock desk. And you click through the various places where it says products or whatever, and in addition to seeing stocks and CDs and mutual funds, you will see bonds.
And Schwab is a good example because they oftentimes participate in the same new individual bond issues as your Morgan Stanleys and Bank of Americas do for institutional investors. So one of the things is, let's say that you live in a high tax state like California, New Jersey, where it would benefit you to buy a state tax-exempt bond and therefore not have to worry about the taxes you pay on the interest, as well as, of course, saving the federal taxes.
Well, just go into one of these brokerage platforms, click in New Jersey, what bond rating you want, A or better. I trust that many of you know that there are bond ratings from... AAA is the best, and some bonds don't even have a rating. And see what's there, and it will tell you all the basics, like the yield, the current yield, the yield at maturity, the rating. It'll give you access to other documents relating to this bond and it will ask you how much you want to buy. And if you buy $5,000 dollars worth of bonds, you will see $5,000 worth of this bond land in your balance, just like if you went out and bought 500 shares of IBM stock.
David Muhlbaum: And then just to double check: those face values, the amount you have to buy, the minimums are 5 or 10 because that's the value of the product?
Jeff Kosnett: Yeah. It's usually 5 or 10, because the way that bonds are traded as a practical matter is even if the school board borrows $172 million, let's say, they break that up into $1,000 chunks. So there's an expression, a bond: a bond is a thousand bucks. So if somebody were to say, I'm going to buy five bonds, they're buying $5,000 of this massive issue. And that means you will get... Let's say if the interest rate is 3% on your $5,000, what does that add up to? About $150 a year, and there you have it.
David Muhlbaum: Yeah. There are a lot of terms out there in bond land.
Jeff Kosnett: Oh, yeah.
David Muhlbaum: And I was just thinking we actually... Earlier, I think I used the expression, on the face of it, and I just used that as the conversational metaphor. But then I thought, "Hey, wait a minute. Is that a reference to the face value of a bond?"
Jeff Kosnett: It could be. There's probably as many bond jargons as there are baseball terms used in investing. And let me tell you this: the men and women I know who have spent their life in bonds and similar, in real estate and preferred stocks and other sort of interest and dividend-driven investment strategies, it's a lot harder than with stocks.
Sandy Block: Oh, yes.
Jeff Kosnett: If you're just talking about a common stock, you interview the CEO, you follow the industry, you read the financial statements, you monitor what's going on with the... you try and learn what you can about what the company's new products are about and whether or not Apple is better than Samsung at something. But there are so many different bonds. There are millions upon millions of different bond issues, all priced differently, all maturing at different dates. It's hard.
David Muhlbaum: Yes. Well that's, I guess, why we have you-
Sandy Block: That's right.
David Muhlbaum: -and your column and your newsletter. But that's also, I think, kind of touches on a little of the question of what I was saying before, about how people tend to view stocks as interesting and bonds as boring. I'm oversimplifying. But is because the stocks, the companies have those stories and they have the people and they have that narrative that generates all kinds of coverage from lots of people, including us. And bonds, it's a little harder to write about what each bond's personality is.
Jeff Kosnett: That's true. I know. Everybody will joke about finding the next Microsoft stock or the next Apple stock. Nobody's going to say, "Boy, those 6.2% Walmart bonds of 2049. They just don't make them like that anymore." Which is true, that right now they're not.
David Muhlbaum: But as you mentioned earlier, the person who finds that overlooked security that is paying a high percentage and has a good risk, they're going to be like, "I did it. I got it."
Jeff Kosnett: I wish Kiplinger's Investing for Income had been around about three years before it started, when we were just coming off the financial crisis and the credit crunch and the recession of 2008 and 2009. What happened then was that the only bonds that really held their value and the only interest rates that stayed low were those guaranteed by the US government.
So you had Treasury bonds paying very low rates. You had cash savings accounts, CDs, that kind of stuff, because it's guarantee paying very low rates. But really great corporations, really the cream of the crop of American business, American Express and Walmart and Illinois Tool Works and all the AA- and AAA-type companies, they were going back into the bond market and they were having to pay very high interest rates: 6%, 7%, 8%.
Jeff Kosnett: I remember buying for myself, but also hopefully I recommended it for the Kiplinger's readers, an American Express 10-year bond, back in like 2009, 8.125%, eight and an eighth percent. Now that American Express bond, you would get 8% when the dividends in their stock maybe were one. The interest rate on a savings account was maybe two.
And of course, you know what that meant. One, if you sold that bond a few years down the road, you got a huge capital gain. Or if you kept it until it matured, you were collecting 8% on a very low risk investment when the bank was paying you one. So that's the advantage of buying individual bonds sometimes.
David Muhlbaum: As long as we're checking in on history, can we go back a few years ago when there was a lot of bonds, including lending by governments, paying 0%. Why that was, why it continued, and why anyone would buy a 0% bond?
Jeff Kosnett: Well, that's still the reality in a lot of the world, like Europe and Japan. An individual investor or saver who would buy a bond with a negative interest rate... In other words, I'm paying the government of Germany a half a percent a year, so they can use my money. It makes no sense. And you or I or any of the readers of Kiplingers would know better and would not do this. You would be better off, in theory, just carrying a wad of cash in your wallet or putting it in a drawer in your house.
David Muhlbaum: Under the mattress!
Jeff Kosnett: Under the mattress.
Sandy Block: Coffee can. Coffee can.
Jeff Kosnett: Right. However, there are two reasons why these bonds exist. One is that there was worry about deflation for a while. And if you're going to have deflation and you have a negative 1% bond, but everything deflates by 3%, you're better off. And in some of the world where the economy was really hurting for a long time, and still is, there was serious worry about that.
A second reason is that many government bonds, and this is true in the United States as well, the people that own them are not you and me: they are banks, they are pension funds, they are other governments. They're pretty much required to buy these bonds because of the government guarantee. The expression we all know as "full faith and credit."
So a German bank doesn't have much choice. They have to buy these German government bonds. And the government knows this and so they keep the interest rate to the point where even they profit from this. So these are not securities that are aimed at or are even suitable for individual savers and investors. It's more of a political and institutional type of a situation.
David Muhlbaum: Okay. I understand that those bonds are not for you and me as the retail investor, but again, going back to my idea of the 401(k) investor who holds bond funds in their 401(k) and that those bond funds then own individual securities. It's possible that those bond funds could have some of those very low-paying Treasuries because those bond funds, in turn, are structured so that they're supposed to invest in that kind of stuff. Is it possible?
Jeff Kosnett: That is correct. If you have a fund that is organized and structured as, say, a total bond market fund, it has to own bonds in proportion to what's out there, and that means a heavy dose of government bonds because, as we know, the government is the biggest bond issuer in the world.
However, there are many funds that do not have to do this. They are much more flexible, much more variable, much more able to focus on corporate bonds, on municipals, on credit instruments, on participating in loans, on buying packages of mortgages. All that stuff yields considerably more than the US Treasury right now. And the risk is minimal in terms of the credit.
Jeff Kosnett: I mean, once again, if we were having a economic downturn, where real estate borrowers were defaulting and corporations were going out of business and banks were folding like they did back in 2008, you are right, this stuff would be toxic. But we're not having that right now. Banks are in much better shape than they've ever probably been in this country, other than for the short time in 2008, maybe since the Second World War.
Corporations have so much cash they don't know what to do with it. You're going to get paid. You own a bond, you own shares of a dividend-paying company, you own part of a real estate trust: you are going to get paid. And if you're going to get paid several points more than the US government pays its borrowers from the Treasury, go for it. This has worked great for the whole time that we have published this newsletter. And if you have one bad year after 10 good ones, you're still way ahead, so go for it.
Sandy Block: All right. I think that's a good note to wrap up on because Jeff is telling us we're going to get paid.
David Muhlbaum: Yeah, and I think Jeff has also conclusively disproved the idea that bonds are boring. So thank you very much for joining us. We look forward to having you on again, if not in a year to talk about the inflation forecast, then maybe even sooner. Thanks again.
Jeff Kosnett: Thank you.
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