Bonds are starting to provide serious competition for the stock market. I returned recently from the Exchange ETF conference in Miami Beach and was struck by how confused the registered investment advisors seemed to be on what was going on in the markets. One particular point of confusion was the bond market. In 2021, participants at the same conference confidently declared the traditional 60/40 stock/bond portfolio dead. This year, with yields on the 2-year Treasury over 4.5% at the time of the conference, there were plenty of discussions in the hallways about the appropriate role of bonds in a portfolio. Several RIAs told me they had clients wondering why they shouldn’t just put all their money in a 2-year Treasury and stop worrying about the stock market. ‘Tells’ tell the story I have had the same experience with my own family. My mother, who pays close attention to yields on bank CDs, called to say how amazed she was that she was finally being offered a reasonable return (4%!) for one-year CDs. She inquired about buying Treasury bonds directly, which she has never once inquired about in the past. On Saturday, at a dinner with my family, my brother-in-law took me aside to ask why he shouldn’t just put all his savings into Treasury bonds and forget about the stock market. I have been covering markets for 33 years, and one of the things you learn to pay attention to is stories like these. When your family starts asking you about stuff they never did in the past, that is a tell. Asking about putting all your money into bonds and chucking the stock market is like the shoeshine boy talking about stock market tips at the top of the stock market. It’s a tell, and it tells me that bond yields are a topic in the general population and the bond market is now becoming serious competition for the dollars that were in the stock market. Individuals can of course buy Treasury bonds directly from the U.S. government through TreasuryDirect. But here’s something interesting:…
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