Note Of Caution On Reaching For Yield
Tiho Brkan | Oct 17, 2013 01:59AM ET
A lot of the investment ideas and trades that I write about are tailored more towards younger investors who are risk prone and have the time to make back some capital if they make a mistake or two. For the more risk averse investors out there, the chart above shows asset classes which gift a decent dividend yield relative to the local bond market as well as the US Treasury yield.
However, while some of the yield looks very attractive in countries like Australia, Canada and Singapore, these countries are plagued with super high private sector and mortgagee debt levels. There is also a decent amount of evidence to show that housing bubbles are in progress in some of these countries. Essentially, while history does not repeat, it does somewhat rhyme, so here we have a similar situation to where US and EU were prior to their crisis playing out.
Chart 2: ... but be careful not to get caught in another credit bubble!
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