Friday December 30. The Dow ended the year at 12,217. I had predicted 12,700. And less 1000 words …

Friday December 30. The Dow ended the year at 12,217. I had predicted 12,700. And less 1000 words …



The FAGIX low-grade corporate bond fund paid an extra-large dividend on December 30. I am grateful especially becuz I have still been recommending to buy it. I am guessing that it will be OK throughout 2012. The biggest danger to bonds is a rapidly growing economy. If the economy starts to grow faster now than has been forecast, because that growth has been the discounted into the market at the present, then this will put a downward pressure on bond prices, including FAGIX. The reason I am guessing that FAGIX will be OK is that I am guessing that this will not happen. That is, I am guessing that the economy will continue to grow slowly, along the lines that have already been forecast. I personally hold a lot of FAGIX and increased my holdings the last several months. So I am betting on it myself. I would never recommend something that I did not believe in enuf to buy it myself. So I hope, of course, that it will do well. Nevertheless, there may be some downward pressure start to come against bonds like FAGIX as time goes on. So it is good to watch it. People often say, "Don't put all your eggs in one basket." Andrew Carnegie, the wealthy 19th century steel magnate and Christian philanthropist is quoted as having said, "Concentrate your energies, your thoughts and your capital. The wise man puts all his eggs in one basket and watches the basket." So, altho we do not have all our eggs in one basket, we are still wise to watch our baskets. I will be watching FAGIX very closely. If the price drops, I will probably still hold it. It pays a handsome dividend, and if the market price per share drops, the dividend will repurchase a larger number of shares. I have watched my bond funds rise and fall in price over more than ten years. What keeps them a good investment is several things: 1) the low return on equities becuz of slow growth, 2) slow economic growth, and 3) low inflation, which is kept low by the slow economic growth. It is, more than anything else, the slow economic growth, that makes them a good investment. And, as I said before, FAGIX returned average 10% over the last ten years, whereas my large equities fund FAMRX returned about 3.5% OVER THE SAME PERIOD. U.S. News and World Report gives FAGIX top rating for mutual fund performance in 2011. http://money.usnews.com/funds/mutual-funds/rankings/high-yield-bond. But as the standard investment disclaimer always says, "Performance data shown represents past performance and is no guarantee of future results."