The Everything Bubble

[mattee2264]

Problem though is that even a safe 6-7% is very boring and unattractive to most investors who always look in the rear window mirror when it comes to projecting future returns and over the last 5 years you'd have made over 25% a year investing in the Nasdaq and almost 15% a year investing in the S&P 500. And investors aren't worried about losing money because they figure the Fed will rescue markets at the first sign of trouble. 

 

Bull markets do not end because investors decide bonds offer a better risk-reward. They end because sentiment shifts and investors are more worried about losing money than anything else. That is probably why stagflation is the greatest worry because it could conceivably prevent the Fed from rescuing markets and might even require them to increase rates as well as being a serious headwind to earnings. 

[Dinar]

6% from a bond is essentially zero return after tax and inflation.  So while TIPS at 2.5% are attractive in a retirement account, they are not attractive to a tax paying individual

[mattee2264]

Institute of International Finance recently stated that global debt (governments, consumers, businesses) is $315TR. That compares to global GDP of $109.5TR. 

 

Maybe it is nothing. But there probably is a link between massive accumulation of debt since 2010 and the incredible global stock market performance. And if interest rates stay high or there is a rise in unemployment or a fall in corporate profitability or bond vigilantes start disciplining governments running unfunded deficits then it probably will start to matter in a big way. 

[Luke]

1 hour ago, mattee2264 said:

Institute of International Finance recently stated that global debt (governments, consumers, businesses) is $315TR. That compares to global GDP of $109.5TR. 

 

Maybe it is nothing. But there probably is a link between massive accumulation of debt since 2010 and the incredible global stock market performance. And if interest rates stay high or there is a rise in unemployment or a fall in corporate profitability or bond vigilantes start disciplining governments running unfunded deficits then it probably will start to matter in a big way. 

Cash will always be trash! 

[Blake Hampton]

11 hours ago, Luca said:

Cash will always be trash! 

I’m starting to think more-so fixed income