I'm going to say this here and now for posterity and I hope you bookmark it:
There's going to be such a brutal bond investor slaughter at some
point over the next decade that the streets of Boston's mutual fund
district will run red with blood, the skies will be shot through with
the lightning and thunder of unexpected capital losses and those who
manage to survive will envy the dead.
Now a slaughter in bonds will not look like an equity market crash,
the volatility characteristics are different and bonds eventually
mature. But in some ways it will feel much worse than a stock crash
because the money parked in bonds is thought of as low or no-risk.
The fixed income guys know what's going to happen, too. Why do you
think the Bond Kings at PIMCO and DoubleLine are pushing into equity
funds? They're getting three-year track records under their belts for
when the big switch comes.
And it will come.
You know how I know this? Because you lunatics are plowing money into
fixed income at all-time low interest rates during the parabolic final
phase of a 30-year bond market rally. You are going limit-up long into
one of the most obvious blow-off tops in the history of investing. And
you're doing this with almost guaranteed inflation ahead of us and only
the prospects of negative real rates of return on your T-bills. (more)
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