Despite the “Grand Reversal,” Stick With Stocks
Thursday, 22 May 2014 20:55
Last year, stocks were up strongly while bonds struggled. However, this year so far, U.S. stocks have struggled to hold onto gains while U.S. bond yields have plunged. Most recently, last week, stocks slipped as investors digested mixed economic data and U.S. small caps entered correction territory, and equities are now up only nominally year-to-date. Meanwhile, as stocks floundered, bonds continued to rally – a broad measure of the U.S. bond market is up around 3.5%. The yield on the 10-year Treasury note broke below 2.5%, a six-month low, thanks to several factors, including institutional buying and some evidence of sputtering global growth. As I write in my new weekly commentary, given the sharp and “Grand Reversal” from 2013, many investors are wondering: “How should I be positioning for the long term?” My answer: Stick with stocks. Despite the strong performance of bonds year-to-date, I remain cautious toward fixed income and advocate […]

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