However magnificent the Magnificent Seven tech firms may be, trying to find the next shiny object in the stock market is a fool’s errand. Remember what happened to Captain Ahab in Moby-Dick? Despite the captain’s three attempts to catch it, the great white whale destroyed the Pequod and killed all but one of the crew. Beware.
How much investment capital do you need to live comfortably throughout your retirement? Given some reasonable rate of withdrawal, and taking into account Social Security and any fixed pension benefit you may have, what figure, in today’s dollars, would you need to start with on your retirement date? In other words, what’s your number?
Merriam-Webster defines chimera as “an unrealizable dream.” Such is the case for any bond that purports to offer safety, high yield and liquidity. Short-sighted yield chasing is the eternal chimera of higher yield without higher risk. Investors say they want safety and income; what they really want is all the income they can get and the illusion of safety. Reach for yield at your own peril.
