I haven't been, and it shows in the garbage posts that populate this blog.
"Bonds, once a safe haven, may be next big risk" by Beth Healy | Globe Staff, February 15, 2013
Investors are well trained to worry about stock market crashes. But what if the next big risk lurking on the horizon is in bonds?
Wall Street firms and many well-known market strategists are sounding alarms about these seemingly benign — even boring — investments. A 30-year bull market in bonds, which drove prices sky-high as interest rates plunged, is ending, they say.
The Globe basically stopped sounding it after this one-day wonder on the front page.
As it vanishes, so will the safe haven investors turned to in the financial crisis.
“Individual investors are going to be stuck between a rock and a hard place,’’ said Andrew Lo, a Massachusetts Institute of Technology finance professor and chairman and chief investment strategist at the Cambridge investment firm AlphaSimplex Group.
Particularly for retirees, who often devote a larger portion of their investments to bonds, “Frankly I don’t know what they’re going to do,’’ Lo said.
Bond prices go down when interest rates rise. Right now, rates on all kinds of bonds, from government securities to corporate debt, are at or near historic lows and have almost no place to go but up. That may mean troubling times ahead for investors who have come to rely on bonds as a reliable place to hide from the risks of the stock market.
If bond portfolios get hit hard, that could mark a third major setback for investors since 2001, following two dramatic stock market plunges. A serious bond market decline would not take place all at once, like a bad session in the stock market. But bond investors could face a slow, steady bleed for years, with annual losses of about 1 to 2 percent.
I may be poor, but I'm glad I'm not invested in any of that. What they are basically telling you is the money behind the deals has already been stolen by government and Wall Street so don't expect anything back.
A scenario like that has not played out since the 1940s. That’s the last time 10-year US Treasury notes offered interest rates below 2 percent, as they have recently. From there, rates rose slowly for years, accelerating to double-digit levels by the early 1980s.
Another market like that could make bonds rocky investments for a long period....
Investors are not used to this....
Mutual funds that own bonds have been especially reliable sources of investment gains in recent years, as the Federal Reserve pursued a policy of keeping interest rates low to boost the economy. But rates are expected to rise once the economy improves and the Fed backs away from its strategy of pumping billions of dollars into the financial system.
Related: Fed Funnels Made Millions Off Mutual Fund Bailout
Someone is getting pumped.
“It can get dangerous for bond investors,” said Mohamed El-Erian, the chief executive of Pimco, a West Coast investment firm that specializes in bonds.
Merrill Lynch is calling it the “Great Rotation,” from bonds to stocks.
Bill Gross, who runs the largest bond fund in the world at Pimco, recently warned that the bull market for bonds is ending, and that stocks are more attractive. Large investors, such as pension funds, are preparing to shift away from bonds due to the growing risks, which could further fuel a drop in bonds.
Analysts are concerned about average investors who have moved heavily into bond funds since 2008. Investors have poured $894 billion into bond funds over the last four years, twice as much as over the prior 16 years combined, according to Morningstar Inc., a Chicago firm that tracks mutual funds.
Looks like another trillion-dollar bailout if it costs banks; if not, I'm sure the individual investor will take the loss for the good of the economic and political system.
“You’ve had people running from the volatility of equities,’’ said John Sweeney, an executive vice president in Fidelity Investments’s retirement group. But as the herd has moved into bonds, he said, they face new risks....
MFS Investment Management, a Boston mutual fund firm, estimates it like this:
I'm tired of monied media and its mouthpieces, sorry.
--more--"
Related: Bond Craze Could Run Its Course in New Year
Also see: His Name is Bond
