In 1982, the interest rates on 10-year U.S. Treasury bonds peaked at 14.6 percent. Now, 10-year Treasuries pay only 1.7 percent. As interest rates decline, the prices of bonds advance. Bond prices have been on a rise for thirty years.
It won’t continue. The Federal Reserve is choking on all the money it has created. When the supply of money grows faster than the supply of goods and services, prices, eventually, cannot help but rise. As prices rise, interest rates on bonds go up as well, and the prices of bonds go down.
Sell most of your bonds and bond funds.
Stocks are a different story. Too many investors are avoiding them. Since 2007, some $350 billion has flowed out of stock mutual funds
This won’t continue either. Go opposite to the prevailing tenor of opinion. Investors love bonds, and they’re avoiding stocks. Do the opposite. Sell bonds. Buy a broad aggregate of stocks and hold them.
There are always reasons not to buy stocks. If you wait until the coast is clear, you’ll wait forever. Nobody buys at the absolute bottom and sells at the absolute top. Disregard current headlines. Sell most of your bonds and buy mostly stocks.
It’ll pay off.
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