Bond-Buying Strategy

The classic bond-buying opportunity when interest rates drop: Investors can lock in high yields and defer interest income, too. One study calculates that 20-year, AAA-rated industrial bonds rose an average of 15.6% during five interest rate seings. These seings, from peak to trough, usually lasted for about one year.

Conservative strategy: AAA-rated coporates or Treasury issues.

Aggressive strategy: Lower-rated issues that swing more in price, providing greater tax deferral (and greater risk). However, even speculators avoid bonds rated lower than A when the depth of recession is not completely clear.

Easy Profit for Small Stockholders

Some companies are willing to pay a premium of 10% to buy back small holdings (under 100 shares). It helps them cut the cost of servicing minor shareholders. There's no broker's fee for selling holdings directly to the company.