Outside the Stocks: Fixed Income


Itching to get in the game, but still cautious about putting your money in stocks? Karen Finerman reveals her favorite trade in fixed income!

As we’ve been telling you all week in our series “outside the stocks", there are other ways to invest outside the equities markets.

On Tuesday Joe Terranova told you about the currency trade (if you missed our report click here)and on Wednesday Tim Seymour gave you a few ideas on how to play commodities (if you missed that report click here).

Now it’s Thursday and Karen Finerman has some other ideas for you -- fixed income investments.

First, what’s a fixed income investment?

According to Investopedia, “it’s an investment that provides a return in the form of fixed periodic payments and the eventual return of principal at maturity. Unlike a variable-income security, where payments change based on some underlying measure such as short-term interest rates, the payments of a fixed-income security are known in advance.”

Typically they’re things like Treasuries, corporate bonds, municipal bonds and the like although there are more complex fixed income investments, as well. Our sponsor Charles Schwab is just one of the many brokers that provide the mechanism for these kinds of trades.

So, what’s Finerman's trade?

Ahead of the broadcast Karen Finerman told our producers that her favorite play in the entire fixed income space is shorting Treasures for the short-term with the ProShares UltraShort Lehman 20+ Yr ETF .

That’s an ETF that lets you bet against T-bills by getting long. “I think that the flight to quality hasn’t completely reversed," she explained.

Also she said there are great opportunities in corproate bonds and you can play that with the iShares IBoxx $ Invst Grade ETF .

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Trader disclosure: On Feb. 19th, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (BAC), (EEM), (FXI), (PBR), (TM); Seymour's Firm Owns (VIP); Terranova Owns (KCE), (XBI), (AMGN), (FXC), (DIS); Terranova Owns (AMGN) Puts; Terranova Owns (IBM) & (IBM) Call Spread; Finerman's Firm Owns (RIG), (MSFT), (NKE), (FL); Finerman's Firm Owns (DNA) & (DNA) Call Spreads; Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO), (BBT), (VNO); Najarian Owns (CELG); Najarian Owns (EEM) Call Spread, (GDX) Call Spread, (GLD) Call Spread, (MOS) Call Spread, (STI) Call Spread; Najarian Owns (AMAT) Put Spread, (CHK) Put Spread; Najarian Owns (FCX) & (FCX) Calls; Najarian Owns (GS) Calls; Najarian Owns (GE) Puts; Najarian Owns (HPQ) Spread; Najarian Owns (MSFT) & (MSFT) Short Calls; Najarian Owns (MS) & (MS) Short Calls; Najarian Owns (WFC) & (WFC) Calls

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