December 15, 2015
By Peter Bower
Now that we are on the verge of higher interest rates, we are seeing consequences of cheap money for too long. It’s only human nature that when interest rates are low, some investors stretch for higher yields, not fully understanding the risks they are undertaking. Only as some of these investments, like the Third Avenue High Yield Fund, begin to blow up do the risks become obvious.
Yield-hogs refer to investors seeking the safety of fixed income type investment that fall for structured products that are created to look safe, but are in fact very risky.
They are wolves cloaked in sheep clothing. More of these investments will also go sour. More money is lost by yield-hogging than just about any other systemic investing error. Remember, diversification and reasonable returns from sound business entities are the best protections from a sheep turning out to be a wolf. Be well, my friends!
The Lonely Bull
