Tags: Hulbert | sell | bonds | Treasury

Mark Hulbert: Sell Your Bonds -- Right Now!

By    |   Sunday, 13 May 2012 11:28 AM

With interest rates having no place to go but up, it’s time to get out of bonds – now, says market guru Mark Hulbert.

He sees a conundrum. Investors realize bond yields will ultimately rise from their current near-record lows. But investors are reluctant to sell their bonds yet.

“What will the 10-year Treasury be yielding a decade from now?” Hulbert asks on MarketWatch. “If you’re like virtually everyone else of whom I ask this question, you believe its yield will be higher — and perhaps much higher.”

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

Despite this expectation of a bond slump, investors continue to put money into fixed-income investments. U.S. taxable bond mutual funds saw a $4.6 billion inflow in the week ended May 9, while stock funds saw a $6.5 billion outflow, according to Lipper.

If investors aren’t willing to sell their bonds yet, that means they think they can time the market to sell them before it drops, Hulbert writes.

“I call that a triumph of hope over experience.” His research of bond-market-timing newsletters over the last 10 years shows they had no success.

That means “the rational thing to do is get out of bonds now,” Hulbert says.

For now, you can why investors are wary of selling. Treasurys have rallied for eight straight weeks, the longest streak in more than 13 years, amid global financial turmoil.

“The Treasury market is telling us that there’s a lot of uncertainty,” David Coard of Williams Capital Group tells Bloomberg.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

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Sunday, 13 May 2012 11:28 AM
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