Steven Leuthold, the longtime bear who made a successful bullish call back in the winter of 2008/2009, is cutting back on junk bonds that have offered big returns over the past year, shorting Treasuries, and turning instead to high-yielding stocks.

“Since we think interest rates are headed up, there’s probably as much risk in bonds as there is in stocks now,” Leuthold tells BusinessWeek. “Junk bonds have been a major part of the portfolio over the last year and a half, and the returns have been terrific. But we’ve reduced our stake in them from 14% of the portfolio to 3% recently. High-yield bonds have rallied 40% or 50% in the past year and their yield spreads [how much more the bonds yield compared with higher-quality corporate bonds] are no longer so attractive. We’ve replaced some bonds with high-dividend yield stocks. The Verizons, the Altrias, the Eli Lillys of the world now have 6% to 7% dividend yields.”

Leuthold says his biggest stock positions are in the consumer electronics industry, and he’s also high on Canadian and Asian banks that didn’t get hit hard by the U.S.’s financial woes. He does have some positions in banks that were beaten up in the crisis and are now undervalued, including Citigroup, however.

Another area of the market Leuthold is high on: “clean tech” stocks — companies dealing in wind or solar power and efficient batteries. “We can’t live on oil forever,” he says. “We recommend clients have 5% to 10% of their portfolios in cleantech, but we tell them to buy it and put it away for 10 years because these changes won’t happen overnight.” He also says it’s key to be diversified in clean tech holdings because the sector is very volatile.