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B y w w w . P r o f i t a b l e I n v e s t i n g T i p s . c o m
Time to Buy Bonds
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
Over the years well-chosen stocks typically
provide a better return on investment than
bonds. But, this is not always the case.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
In fact, now may be a time to buy bonds and sell
your stocks.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
Click the links below to get your
FREE training materials.
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Don’t miss these free training events!
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Before We Continue…
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
The Market published an interesting article
about Warren Buffet’s favorite
indicator and suggests that it may be time to
sell stocks and time to buy bonds.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
So what’s a fretting investor with rate hikes on
the horizon to do?
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
There’s the obvious choice: Ease up on the
equity throttle and seek the security of the
fixed-income market.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
That’s what Warren Buffett’s favorite valuation
indicator seems to be saying (see “the chart”
below).
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
We’re seeing some of that thirst for safety prop
up Treasuriess lately.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
Even as China has cut back its holdings in U.S.
debt by about $180 billion, according to
Bloomberg, the market has barely budged.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
That’s because, from banks to mutual funds,
there are plenty of buyers out there.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
Buffet’s indicator is a comparison of total
market cap to the gross national product.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
Going back decades this has been a good
indicator for when it is time to buy bonds or
stocks.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
Now, it would appear that the indicator is telling
us it is time buy bonds.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
So Why Did Treasuries Fall?
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
The Wall Street Journal reports a pullback
of U.S. government bonds as stock rally.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
U.S. Treasury bonds pulled back on Monday
after a recent rally, as hopes of fresh monetary
stimulus to support China’s slowing economy
boosted investors’ appetites for riskier assets.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
China’s stocks rallied after soft exports
bolstered market expectations that Beijing
would increase spending and continue to prop
up the equity market by buying shares.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
Looming new U.S. government debt sales also
weighed down bond prices.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
A $24 billion sale of three-year Treasury notes
is due Tuesday, followed by a $24 billion sale in
10-year notes Wednesday and $16 billion in
30-year bonds Thursday.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
In recent trading, the yield on the benchmark
10-year Treasury note was 2.214%, compared
with 2.173% on Friday, according to Tradeweb.
Yields rise as prices fall.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
Does this refute the wisdom that it is time to sell
stocks and buy bonds?
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
The fact is that the market cap to GNP indicator
is a general indicator and an accurate one.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
It does not apply to which individual stocks you
own but to the market in general.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
And even though bonds may have their issues
they are a safe haven when the stocks market
goes bust.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
Lost Touch with Reality
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
Bloomberg Business says that the S&P 500
flouts history as it ‘breaks with bonds.”
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
As far as credit markets are concerned, U.S.
stock investors have lost touch with reality.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
That’s seen in the extra yield bond investors
demand over Treasuries.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
The spread has expanded by 0.48 percentage
point from a year ago, the most since 2012,
even as the Standard & Poor’s 500 Index
rallied.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
While not without precedent, instances when
anxiety in bonds didn’t seep into equities are
rare.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
More than 70 percent of the time since 1996, as
spreads widened as much as they have since
April, the S&P 500 has fallen, with the average
decline exceeding 10 percent, data compiled by
Bloomberg show.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
The average fall in stocks has been ten percent
over the last fifty years whenever market cap
goes too high in comparison to the GDP.
http://profitableinvestingtips.com/bond-investing/time-to-buy-bonds
One more voice has been added to the chorus
that is singing, it is time to buy bonds.

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Time to Buy Bonds