Fun article by Ms. Jones but she doesn't offer any serious counter-argument to Tresidder's points. Towards the end of her article she lists all of the reasons why it really COULD be different this time - i.e. we are starting from unprecedented low interest rates, recklessness regarding the Federal deficit is also unprecedented, the Fed has been printing money for years and in general doing everything it can to foster investing in equities, etc.ochotona wrote:Kathy Jones has the most sensible bond advice ever. I don't care if the purists want only 20-30 year Treasuries. A really good portfolio would consist of stocks, gold, cash, and Kathy.MangoMan wrote:Timely article form the Schwab desk:
Bond Bear Market: Why Investor Fears May Be Overblown
Historically, bond bear markets tend to come and go relatively quickly, leaving investors who stayed in the fixed income market relieved they didn’t jump out. Nevertheless, because so many people have expressed fear of the current bond bear market, it may be useful to take a deeper dive into how various types of bonds have performed during bear markets. As we always say, past performance is no guarantee of future results, but perhaps a look back can be enlightening.
Of course the question for most of us is if bonds aren't a good risk where does the money go? Tresidder's answers (physical real estate, commodities, selected foreign stocks, private equity, etc.) are obviously anathema to any passive investor (and he makes it clear throughout his site that he isn't writing for that audience). My take away after re-reading both his bond artcile and the Kathy Jones piece a few times is that if you prefer to take your risk on the equity side of things keep your bond maturities short.