There is also a shortage of mutual funds that can be flexible in investing capital based upon the market's overall valuation, and which can capably invest on the short side as well as the long side of the market. We have formed the Prudent Bear Fund to help provide investors with these alternatives. Since 1958, the dividend yield on stocks has been lower than the interest rate on bonds, while prior to this date, the reverse was true. Dividends have been a useful measure of valuation because they are cash payments that cannot be made for extended periods without earnings, or especially without positive cash flow. Accounting practices and inflation can make reported profits differ from cash available for distribution to shareholders.
Dividends also represent a sign of management's confidence about the future.
When a management team establishes a dividend policy, it is transmitting its confidence level in its future business prospects. The Prudent Bear Fund may be appropriate for those investors who have other equity exposure through other investment vehicles, or who have a currently negative, or generally less favorable outlook for the overall stock market. Sophisticated investors have long used hedge funds as an important vehicle for wealth accumulation. Back to top For more information on the risks in today's market, see the slide presentations in the Bear Library .