While the market panics about deflation, Eric Fry says forward-looking investors can profit by swimming against the tide. The Inflation-protected Treasury bond ETF (NYSE:TIP) has never been cheaper, meaning a great chance for gains as the government’s mega bailouts feed through to higher prices.

Weak auctions for government bonds strengthen the case to buy high-grade corporate paper, says Eric Roseman. Many of the world’s top companies have stronger balance sheets than governments. And the coming tidal wave of T-bonds means corporate bond yields may never be this high again.

Chasing market moves is the worst way to invest, says Steve McDonald. And piling everything into one asset class will not work either. Over time, you will always make more money with a balanced portfolio. That means a suitable combination of stocks and bonds. Steve comes up with a simple formula to find a portfolio split that works specifically for you.

Government bailouts for private banks are having a strange impact on bond markets, says Andrew Gordon. Fed guarantees have investors swapping traditionally safe government sponsored enterprise bonds for corporate bank bonds.

The tough thing about buying stocks is, you never know when they’ll appreciate in price (and you’ll make a profit). The other tough thing is, no matter how much homework you’ve done, there’s always a risk that something will go terribly wrong (fraud, accident, etc.) and your position will be wiped out. There are no guarantees when it comes to buying equity.

In the currency market, the dollar was sharply higher against the euro. Late Tuesday, the euro was trading at $1.5434 vs. $1.5536 on Monday.

“When sorrows come, they come not single spies, but battalions…”

Hamlet

While the market rallied for the last few years, one strange thing was happening. The spread between yields on corporate bonds and government bonds was virtually non-existent. This means investors weren’t paid much for the risk they took on for getting into corporate bonds.

When I last commented on the bond market (December 5th’s What’s really going on with bonds), bond prices were inexplicably rallying, sending yields on ten year Treasury bonds to 4.4%.