Positioning for 2010

While the economy appears to be on the mend, I remain skeptical about the prospects for a meaningful long-term economic recovery. The stock market is often out of sync with economic reality. However, the basis of investment decisions should be what the markets are doing, not what we think they should be doing, and right now, stocks and high yield bonds are trending up.

Investing in high yield bond mutual funds (in conjunction with our moving average exit strategy) carries much less risk than stocks, and many of these funds are in strong uptrends. I am very confident about my ability to effectively and safely manage high yield bond funds. The risk/reward ratios on these types of investments remain very high and volatility remains very low. Consequently, I will continue to overweight the sector in a big way for all conservative and moderate account.