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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Steve Forbes is Chairman and Editor-in-Chief of Forbes Media. Steve’s newest project is the podcast “What’s Ahead,” where he engages the world’s top newsmakers,
Steve Forbes is Chairman and Editor-in-Chief of Forbes Media. Steve’s newest project is the podcast “What’s Ahead,” where he engages the world’s top newsmakers, politicians and pioneers in business and economics in honest conversations meant to challenge traditional conventions as well as featuring Steve’s signature views on the intersection of society, economic and policy. Steve helped create the recently released and highly acclaimed public television documentary, In Money We Trust?, which was produced under the auspices of Maryland Public television. The film was inspired by the book he co-authored, Money: How the Destruction of the Dollar Threatens the Global Economy – and What We Can Do About It. Steve’s latest book is Reviving America: How Repealing Obamacare, Replacing the Tax Code and Reforming The Fed will Restore Hope and Prosperity co-authored by Elizabeth Ames (McGraw-Hill Professional). Steve writes editorials for each issue of Forbes under the heading of “Fact and Comment.” A widely respected economic prognosticator, he is the only writer to have won the highly prestigious Crystal Owl Award four times. The prize was formerly given by U.S. Steel Corporation to the financial journalist whose economic forecasts for the coming year proved most accurate. In both 1996 and 2000, Steve campaigned vigorously for the Republican nomination for the Presidency. Key to his platform were a flat tax, medical savings accounts, a new Social Security system for working Americans, parental choice of schools for their children, term limits and a strong national defense. Steve continues to energetically promote this agenda.