We’ve been keeping a close eye on US Treasuries lately. That’s because the bond markets are full of useful information about the real state of the economy. For one, they tell us how investors really feel about government wastefulness.
Stock Market Rally in Financial Horror Movie. Drag Me to Hell! That’s the title of the first horror movie with a credit crunch theme. No kidding. We just read about it in the Financial Times.
Everything is happening just as we thought it would. Stocks are rising. And people think they see better times coming.
Ten years ago, Asian equities paid pitifully low dividends following the bull market in the late 1990s. But that’s all starting to change as many markets in the region now offer higher dividend payouts than the S&P 500 and many European equity markets…
The markets may be stuttering…with the euro suffering in overnight trading and stock indices down over a percent at today’s open…but a continued rally still seems the foregone conclusion du jour. We’re not necessarily going to question it.
Is the bull back? Not so fast, according to market history.
I was captivated by the Wall Street Journal headline “Bearish Big Investors Catch Gold Bug” by Gregory Zuckerman, because I don’t ever expect to see anything favorable about gold in the WSJ since it is concerned primarily with providing information and news about stocks and bonds so that you will be motivated to constantly buy and sell stocks and bonds.
We’ve been in a thirty-year bull market for US Treasuries, says Matthew Collins. And near-zero yields mean little reward for the risk of potentially buying into a bubble. Matthew says investors would do better to put their capital in select high-grade corporate debt or gold.
I’m happy to turn the page on 2008. We had a great streak of profitable trades in Strategic Short Report, but it still was a stressful, painful year to be an investor. Even if you’re far more patient and disciplined than most investors, you still were punished in 2008.
Government bonds flourished as commodities and equities plunged in 2008. But Theo Casey says a new bull market in corporate bonds could soon take its place. As investors seek higher returns than Treasuries, demand for high-grade corporate debt, particularly if backed by the government, could soar.
