Yuck Fale!

I was visiting a friend at Harvard a number of years ago. Unbeknownst to me, it was the day of the football game between Harvard and Yale. There were signs and chants all over campus: "Yuck Fale!"

I have no ties to Harvard or Yale, I admire both universities.

Anyways....

I am a fan of Yale's investment chief David Swensen. He authored a book in 2000 titled "Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment." It is a great read on his investment principles. Mind you, the returns on Yale's endowment have been world-class since he started there in 1985.

In a recent interview at the beginning of 2009, he targeted distressed debt.

“There are some really extraordinary opportunities in the credit world,”

“Everything, from bank loans to investment-grade bonds to less-than-investment grade bonds, is priced at really extraordinarily cheap levels.”

Lets keep an eye out on the performance of bank loans and investment-grade corporates, and see how his calls turn out!

Treasuries 2008

"I think Treasuries are the most overvalued asset in the world, bar none," Gross said. 4/4/08

Its a good thing I didn't jump on Bill Gross' advice by selling out of treasuries in April.

I have some money in Wasatch-Hoisington US Treasury Fund (WHOSX) which is 95% invested in treasuries. The fund didn't move much from April through mid-Nov, but had a nice run from mid-Nov through end of December. I have sold half my position.

The question I have is where to invest in now. In terms of fixed income, seems like investment grade corporates and high-yield are 2 areas which might be interesting. The spreads on these 2 fixed income asset classes are at unprecedented highs.