The case for bonds and stocks

Michael Santoli of Barron’s discusses in his most recent column the choice between stocks and bonds.  According to him, the “migration of cheap money and modulations of risk appetites” serve as two factors that push investors to move back and forth between the two investments.  As people sought safety and income stream, they flew to bonds, which in themselves have occasionally provided high yields.  Even in situations where dividend yields are higher and valuations are cheaper, investors still choose corporate bonds.  Because of this, he writes:

This indicates neither that these stocks are massively undervalued nor that the bonds are a bust, but suggests that if the credit markets are correct — or are so overrun with liquidity to make these yields sustainable — then conditions should remain supportive of stocks generally, making corrections not so deep and spilling some of that liquidity toward equities at times.

Read more HERE.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s