12% Dividend Yield? What's Not to Love?

Nonetheless, you are investing in a diversified fund that is professionally managed by Morgan Stanley.

As for the bonds, there is something quaintly old-fashioned about investors dumping "emerging market" government debt in a financial panic and seeking the "safe haven" of U.S. dollar-denominated debt instead.

The "emerging markets" have come a long way since the meltdown of 1997-98. These days, most of them are running huge current account surpluses. They're exporting like crazy and racking up billions of dollars in reserves in their central bank vaults. Government debt in most countries is falling quickly, and they have now become net creditor nations.

The ones running the big deficits? The ones living beyond their means and borrowing from the rest of the world to keep going?

Um, that would be us.

Few things are as infuriating as the foolish way the investment business talks about "risk." The reality is that risk is a function of the price you pay.

U.S. government bonds are "safe" in the sense that they will, technically, pay you back. But right now, 30-year Treasuries are yielding less than 5%. Buyers had better pray inflation remains at bay over the next few decades, or the checks they get back won't be worth much.

Decades.

If you think you know where the consumer price index will be in 2020, good luck.

On the other hand, a 12% yield seems to offer a more compelling margin of safety. McKinnon argued recently, "Over the medium term we're still very confident in our view that the yields available in this marketplace are overcompensating you for the risk."

She's probably right.