Sometimes the economic and financial tea leaves are easily read and there is a consensus good or bad feeling. Other times, like now, we have an interesting dichotomy. Equity markets are rising and singing the coast is clear (or at least pretty clear) while bond investors are signaling just shy of Armageddon.
So who is correct ?
In our opinion, both are somewhat correct. We believe bond holders have a better case for a more muted growth outlook for the next few quarters but may be exaggerating their feelings right now due to investments coming from other parts of the world. A sub 1.50% 10 year treasury yield, which the following chart is showing, is just too negative in our opinion.
While we are interested in the winner, we are more interested in taking advantage of each one’s case.
With rates so low, if you have not refinanced your mortgage lately, it might be time to take a look!
What about those overzealous equity guys?
Sell High! It is that easy, if an allocation of stocks to bonds is now out of whack, Sell, Sell, Sell! That is what we are doing. Of course the markets may go much higher, we hope they do, and if they do, we will continue to participate as we are only reallocating to our appropriate levels again. But if they adjust and come down, it is then time to Buy low, yes, Buy, Buy, Buy.
While it may be hard right now to adjust/sell if necessary, fearing the boat will leave without us, we can promise it will be just as hard, if not harder, to buy low, fearing the end is near when the markets are pointing the other direction.
We hope talking about it helps with the emotions!
Have a Great Day!
PS I am out-of-town the remainder of the week, but will be posting and tethered electronically.