Bonds
CNBC has a section on right now called "If You Had A Million Dollars?" In essence they're asking a few guests where to put a million bucks between treasuries, commodities and large cap stocks. Since I have the TV on mute I don't know what time period they're talking about.
However if their horizon is anything longer than about three months, I'm pretty sure that treasuries will finish dead last on a return basis.
We've discussed bonds before when we noted in the spring that Individuals were not bullish on equities. We also commented last winter regarding massive mutual fund inflows into bonds. These inflows into bonds, fixed income mutual funds and ETFs has only increased in the past few months as investors have become more risk adverse over the summer.
Yesterday for the first time since 1962 the dividend yield on the Dow Jones Industrial Average eclipsed the dividend yield on the 10 year Treasury. This is an astounding statistic as it basically says investors have so little confidence in the future that they are willing to take a real rate of return that will likely be less than the rate of inflation for the next 10 years!
Gun to my head stocks significantly outperform bonds over the next 1, 3, 5 and 10 year horizon! There I said it. Now we'll have to see if I'm right!
*Long certain fixed income ETFs in certain client accounts. Long ETFs related to the Dow Jones Industrial Average in certain client accounts.
However if their horizon is anything longer than about three months, I'm pretty sure that treasuries will finish dead last on a return basis.
We've discussed bonds before when we noted in the spring that Individuals were not bullish on equities. We also commented last winter regarding massive mutual fund inflows into bonds. These inflows into bonds, fixed income mutual funds and ETFs has only increased in the past few months as investors have become more risk adverse over the summer.
Yesterday for the first time since 1962 the dividend yield on the Dow Jones Industrial Average eclipsed the dividend yield on the 10 year Treasury. This is an astounding statistic as it basically says investors have so little confidence in the future that they are willing to take a real rate of return that will likely be less than the rate of inflation for the next 10 years!
Gun to my head stocks significantly outperform bonds over the next 1, 3, 5 and 10 year horizon! There I said it. Now we'll have to see if I'm right!
*Long certain fixed income ETFs in certain client accounts. Long ETFs related to the Dow Jones Industrial Average in certain client accounts.
posted by CR English at 9:40 AM
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