Steve_

This assumes they would invest overseas, and that's not likely given that the ECB is undertaking quantitive easing which undermines the value of Euro bonds either further. The problem at a prime rate of zero is that money costs basically nothing, so any rise will cause a big shock to the market and that is essentially unknown territory. Even a small interest rise is going to cause an outflow into bonds.

Basically I want to sell everything but I'm not looking forward to that tax bill.

Michael

Hedge funds and investment managers invest wherever they think they can get a return that will beat the market. Although I think I have a pretty very good understanding of investing but for the life of me I still can't understand why anyone would invest in 10 year Swiss bonds for a guaranteed negative yield or the German, French, or Japanese bonds for a paltry 0.5% or less unless the yield on those bond drops even further. Purchasing those bonds must be a short term play since nothing else makes sense since all of those bonds would need to start producing negative yields to return up to a whopping 6%.

If there is an outflow into bonds, that should mean that bond yields should drop further due to increased demand. It is a chicken and egg issue. The Fed raises the target interest rate (the discount rate) which could cause panic in the equity market which typically causes investors to flee the equity market and invest in the bond market which causes interest rates to drop. That is the way economics is supposed to work and if it does, holding high yield preferred shares should rise in value.

Steve_

I had a whole ton of Canadian bank stock, in Canada we have what are called "eligible" dividends which are not the same as qualified dividends in the US but the idea is the same - encourage people to buy Canadian stock, because you get a tax credit.

But I ditched them all because of the fall of CAD, which far outstripped any gain from holding them and now I've got a big tax bill coming looks like.

But if I now ditch all the stuff I have in USD, it will be eye-watering. But I suppose it's better to do that than lose the gain.

Steve_

Oops.

Shouldn't have put it back in again.