WSJ reports that "small investors flee stocks... moving the money to bonds, certificates of deposit and bond-like annuities."
The subject at hand is the perceived safety of those assets. A skeptical investor would have a couple of questions to ask here. How much are they paying for the "safety"? And, what kind of "safety" are they getting for their money?
Given the popularity of the "safe" assets, the prices are high and the yields are nil. Bonds, CDs and annuities are in fashion, even if the soon to be retirees' actual investment horizon extends beyond 5-10 years? Zero-yielding and exposed to the Fed's persistent desire to reflate? Granted, it might not work after all and we may have a prolonged Japanese-style deflation. But it is hard to imagine that the Fed will not try. Besides, and I have no opinion on the future of the asset classes mentioned above, one should ask whether the past performance of Treasuries and the like is a good guarantee of future results. Sounds like buying high and doing it collectively.
When they panic, a contrarian in me wakes up. Let them rush to the exits, and I will stand at the gates ready. Take my "safe" CDs and give me your "unsafe" equities. I will buy all I can, at a right price.
I may post here relevant (in my opinion), and not necessarily recent, quotes. Rather than analyzing specific investments, I will attempt to focus on investors' sentiment regarding broader asset classes and/or specific securities. These will be my thoughts/reactions/questions, and they are not and should not be taken as investment advice.
About me
- Anonymous
- In particular, I am interested in investors' sentiment and valuation levels. Disclaimer: I work at an Investment Management firm. My comments on this site are not posted in that role, and no opinions of mine should be construed to be recommendations of or to reflect the views of my employer.
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