What Investors Are Saying Via Bonds.

Today 30 year government bonds are trading under 4%! Let's think about what that means. It says that investors have so little confidence in economic growth over the NEXT 30 YEARS that they are willing to accept a rate of return just slightly higher than the historic rate of inflation (3-3.5%)!

So let's take a look at two indicies (which we in fact own in some form for many of our clients) & their respective yields. These are approximate back of the envelope current calculations but they are pretty close to their likely current dividend yields.
S&P 500------indicated current dividend yield = 3.25%
Dow Jones----indicated current dividend yield =3.63%

So today you can buy the market and be paid to wait. Let's say stocks do nothing over the next year. You'll still make over 3%. If they have a 7% index return that's better than a 10% total rate of return to you. For the first time in a very long time it looks as if investors are being compensated to take a certain amount of risk.

*At the time of this publication we were long for certain investors ETF's representing the S&P 500 and the Dow Jones Industrial Average.