Yields Will Be The Dominant Theme for 2011

It would be surprising if the public (at least as many of them as can be persuaded) wasn't enticed back into the stock market in 2011. The public has been stuck in neutral for almost two years in low-yielding money market and Treasury funds. They're earning next to nothing on their money and are growing tired of it. They're seeing the attractive yields being offered on many stocks and analysts and stock promoters have been pushing the yield story for some time. Investors are starting to emerge from the bunkers in the pursuit of these attractive yields.

Back in October, Barron's Tom Sullivan observed that with interest rates currently near multi-decade lows, investors can do nearly as well keeping their money under the mattresses as opposed to money funds. Not long ago a 30-day taxable money market fund offered an average yield of just 0.04%. "Little wonder," wrote, "Sullivan, "investors on balance have pulled $1 trillion out of them since the beginning of 2009." This was just one of a growing number of articles appearing in the financial press which highlight the paucity of income potential in money market funds. At the same time, writers and analysts are pushing the idea of buying stocks with attractive yields as an alternative to low-yielding money funds.

Source: Safe Haven

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