Is It Time To Bet Big On Bonds?

Is It Time To Bet Big On Bonds?

 

Worst To First:
Top Rebound Plays For 2023


Take what the market gives you. 

If you want to be a successful investor, that’s what you have to do. 

Whether it’s commodities, cannabis, crypto, or tech, there’s always a new bubble building somewhere.

And you’ve got to quickly build a knowledge base to capitalize on it. 

**Side note: We’re looking at you “clean” energy. 

The same is true of market downturns too. 

If something collapses, you’ve got to learn about it in order to see if it will rebound. 

That brings us to the current market. 

Most investors are focused on stocks. 

That’s not the wrong place to focus. It just may not be the best. 

Stocks have had a bad run and some are the best buying opportunities in years. 

But bonds have had a historically bad run. 

We can talk numbers where bonds are down 17% (compared to 19% decline in S&P 500 over the last year).

Or just look at a chart. 

Charlie Bilello at Compound Advisors has put in a chart of bond returns since the 1970s so you can see how truly awful bonds have been doing.

The chart is featured in their article A Bear Market Checklist. 

It really says it all:
 



When we said “historically bad” up top, we meant it.

Bonds have been a catastrophe because when interest rates go up, bond prices go down. 

Since interest rates have risen so much, bond prices, naturally, have cratered. 

It’s worse than when forced selling of bonds in the liquidity crisis of 2008 sent bond prices down 3.8%. 

That’s a drop more than four times greater than in 2008. 

If you’re looking for value, bonds definitely have it. 

And if interest rates resume their long-term downtrend, bonds will be a major bright spot in your portfolio. 

Best of all, bonds inherently have less risk stocks, but at the current prices, bonds have significant capital appreciation potential too.



 

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