August 13, 2010

From JP Morgan Asset Management’s Weekly Insights comes this credible warning. Might be something to share with clients.

Thought of the Week
WARNING!!! One of our biggest concerns going forward:
Rising interest rates blindsiding bond investors. Much like a hiker who takes shelter from a storm under a tree, only to be struck by lightening, investors have hunkered down in the perceived safe haven of bond funds when in fact this may pose the greatest risk to their portfolio in the future. Despite a +70% rally in stocks since March of 2009, we have seen 29 consecutive months where investors have put more money into bonds than into stocks. In fact, more money has gone into bond funds in the last 2 years than went into stocks during the tech bubble in 1999 and 2000. We believe strongly in diversification, and fear that the alarming affinity for bonds coupled with an epic aversion to equities

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