In December investment grade corporate debt soared over 15% as credit spreads plummeted following a crash in September and October.

If you’re debating an investment in high quality bonds then it’s not too late. The Dow Jones Corporate Bond Index yields 7.04% or 460 basis points or 4.6% more than benchmark ten-year Treasury bonds. Twelve months ago that spread was barely 2%, or 200 basis points. Treasury bonds are expensive while corporate debt is cheap.

Many hard-working professionals in the investment business are now being unfairly scrutinized by investors in the wake of the world’s greatest heist last month. 

Over the last several months numerous well-heeled investment advisors have either committed suicide or have been arrested.

Only 12 months ago pundits claimed most emerging markets would be immune from the credit crisis engulfing the United States and Europe. They were dead wrong.

The emerging markets have plunged more than 65% from their all-time highs while rich oil producing nations, including the Gulf States, have crashed.

“This program is intended to fundamentally and comprehensively address the root cause of our financial system’s stresses by removing distressed assets from the financial system.”  Treasury Secretary, Hank Paulson, October 2008

Though I remain a bear in this economic cycle and don't see a bull market in the cards for a long time, the seeds for a tremendous liquidity-driven rally, if only for several months, lay in the cash-hoard accumulating in money-market funds.

Only two Wall Street investment strategists accurately predicted the bear market that began in 2007. One is Merrill Lynch’s David Rosenberg and the other, Joseph Battaglia at Stifel Nicolaus.

I’ve followed the careers of both market seers over the last 20 years and have a deep respect for their market views and prescient forecasts, usually right on the money.

If major sovereign borrowers like Germany and the Netherlands are having difficulties raising weekly bond auctions since October, imagine what lies ahead for many distressed U.S. municipalities in 2009. The picture isn’t pretty, unless the Federal government under Obama bails out the weakest credits, including California, now in the midst of yet another full-blown budget crisis.

Several segments of the credit markets have come back to life in December after crushing losses recorded in September and October. Though it’s too early to celebrate a broad based credit revival, the largest issuers of investment grade debt have surged this month as yields plunge. Mortgage-backed bonds, or agency debt, have also rallied sharply in December on the heels of government guarantees and the Fed’s plan to spend $500 billion dollars to shore up the sector.

Managed futures funds or Commodity Trading Advisors (CTAs) rank as the second best performing alternative index in 2008, according to Credit Suisse-Tremont.

This year, the CSFB/Tremont Hedge Fund Index has declined 19% through November compared to a 15.6% gain for the CSFB/Tremont Managed Futures Index. Only dedicated short-sellers have outpaced CTAs, up 16.8% in 2008.