.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} Dear Mr. Berko:

Dear D.P.:

Low rates on certificates of deposit, Treasury bonds, corporate bonds and money market accounts are hurting most retired folks – putting bumps in their budgets, placing detour signs on their spending and tossing some curves at their golden years. We all know, considering the past record of a manic explosion of our money supply, that interest rates must rise again. But there are two $64 questions: (1) When will rates begin to rise? and (2) How high will they rise?

Only two people know the answers: Lloyd Blankfein, the CEO of Goldman Sachs, who bragged that he is “doing God’s work,” and St. Peter, the CEO of heaven. But they ain’t talking – certainly not to me.

The consensus suggests that rates will begin to rise by late summer and that single-A corporates could yield 7.5 percent by this time next year. The Fed’s prestidigitations have kept the door closed on interest rates. But the pressures are intense, and Uncle Ben (the head fed) realizes he must open the door a crack to let some of the air pressure out or burst the bubble that could force volatile rate spikes.

So there’s a footrace to buy high-yield paper. Investors will grab the hottest stuff and in the process make some mistakes. Sometimes it’s best to be late to the party. As my dad used to say: “The second mouse safely gets the cheese.”

Still, no matter how much I or others may wax enthusiastically about a high-yield investment, the double-digit yield shouts: “Be careful, I am dangerous!”

One dangerous high-yield issue with which I am moderately comfortable is Chimera Investment Corp. (CIM-$3.99), a mortgage real estate investment trust. CIM began its tenure as a public company in September 2007 to surf the crests of easy credit. Back in early 2007, the stock was in the $17 to $19 range. CIM was paying dividends of 12 percent to 14 percent.

Less than a year later, CIM imploded, and in late December 2008, the shares closed at $2.88.

CIM owns a huge portfolio of mortgage-backed bonds that have been marked to the market at about 50 cents on the dollar, which may be overly modest. However, the yield to those who buy CIM at its $3.99 price exceeds 17 percent.

These bonds can recover, perhaps not to par ($1,000), but CIM’s portfolio has the power to gain 25 percent to 35 percent in value during the next couple of years. Meanwhile, the dividend of 68 cents per share could be increased in 2011, because CIM must pay out 90 percent of its earnings.

The consensus is that the share price could increase by 50 percent or more in the coming two years.

Now, please remember, this is a very speculative issue, and it could disappear into the ethers if the economy tanks again. So you should limit your position to 300 or 400 shares.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net. © Copley News Service