This episode of What’s Ahead describes why investors shouldn’t buy bonds. The great bull market in bonds that began in 1982 is over. If you have bonds in your portfolio, make sure their maturities are no longer than three years.
Although interest rates have come up a tad in recent months, they are still at levels not seen before in recorded history.
Rates will be rising as the economy recovers from the pandemic and as the Federal Reserve starts printing money in earnest to help pay for Joe Biden’s spending binge.
Arithmetically, that will mean lower bond prices.
Moreover, the gap in interest rates between Treasurys and the debt of low-quality companies is far too narrow, considering the risks involved.
Best to get out of bonds, or make sure they are short-term. You won’t get much of a yield, but you’ll avoid painful losses.
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