Welcome to the Trading Range

I'LL reiterate my support this month for high-yield bonds and preferred stocks, and I advise readers to make peace with prices that in 2025 swing within a wider-than-usual range. What matters is that these outfits still pay promptly and in full. Buy-and-holders can go fishing, golfing or to the ballpark. And if you want to add to positions on dips, that works, too.

- JEFFREY R. KOSNETT

I mention this because reader Tom from Michigan tells me that after he built up his collection of preferred shares from quality issuers such as big banks and AT&T, he was startled to endure days when the prices would drop by a percentage point or a point and a half. Given all the fast-and-furious plunges in everything from crude oil to Treasury bonds, I am not surprised.

But, more to the point, neither am I concerned. The creditworthiness of high-coupon IOUs is by no stretch imperiled because a political kerfuffle costs the Dow Jones industrial average 1000 points after lunch. I still say thumbs-down to long-term Treasuries, but the rest of the debt and credit universe is in a holding pattern, which is tolerable. Until and unless inflation goes wild or defaults and delinquencies trend toward recession levels, there should be buyer support for sound stuff that offers 6% or 7%.