Monday, May 4, 2009
Time to sell bonds and buy stocks is now!
Have you seen these articles popping up in the past few days?
Bonds Outperform Stocks Over Last 40 Years
There's supposedly all this new "evidence" that bonds have outperformed stocks over the past 40 years. I've even seen advice on Yahoo Finance telling people they should dump their stocks and buy bonds! (Even though this purported trend seems to be getting long in the tooth!)
Well, if I've ever seen a contarian indicator, this is it!!
If you've been riding the big bond boom of the past two years (or 40 years), my advice is this: SELL YOUR BONDS AND BUY STOCKS!
Interest rates have bottomed and with all the global fiscal stimulus that has been enacted, we could be entering a period of stock market outperformance not seen since the end of the Great Depression. More importantly if you are a bond investor, expect central banks to act quickly and aggressively in "taking back monetary stimulus" because of their sensitivity over the hyperinflation issue (which is bogus, but they don't understand that).