WHAT IF RATES SPIKE?

The author advises fixed-income investors to diversify out of Treasury bonds and into convertible preferred stocks and junk bonds. Topics discussed include the likely rise of U.S. interest rates after 2002, high yields on preferred bonds and junk bonds relative to Treasury yields, and consideration of bond-preferred hybrids. Also mentioned are the outlook for bonds and stocks from companies such as communications tower operator Crown Castle, Great Atlantic and Pacific Tea Co., and Ford Motor.