Hi F400, In general bond funds do well when stock funds are sad and visa versa. There's lots of reasons, but that's why having a balance of bonds and stocks is nice. At least something in the account is doing well usually!
The I-Wave says the traditional stock market risk is relatively low in its "Average Risk" range. The bond market by comparison is relatively high risk going into the future. That risk is moderated by the high effective yields. However, ACG which is now paying about 10% was paying OVER 13% at the end of 1999. Nobody wanted bonds back then and everyone wanted stocks.
We will probably see something like ACG yielding over 12% again in the future, but it might take a year or two to get there. That means quite an erosion of share price if the dividends stay the same. My guess is it will drop from its current near $8 price to around $6 before it bottoms all together in the next cycle.
So, if you do start into high income funds, keep plenty of Mr. Lichello's favorite CASH around for buying more shares later. The effective yield improves the deeper the share price drops.
Best regards, Tom
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