The Bond Bubble

Safety conscious investors beware…

Many forward thinking financial experts are predicting the next bubble…

THE BOND BUBBLE!

Many experts are predicting that we could be in the midst of a bond bubble that’s getting ready to burst. If you take a look at the flow of money in the last two years, more money has flowed into bonds than in the last 20 years combined. This trend strongly mirrors the events that lead to the technology bubble bursting. Subsequently, that money flowed into the real estate market because people believed that real estate was a safe haven and that their investments would not go down in value. Obviously that led to a real estate market bubble and since that bubble has burst the money has now flowed into the bond market. Once again the trend is clear; people are putting their money into the bond market with the thought process of “bonds are completely safe and you can’t lose money”.

But of course as interest rates rise, due to inflation, bond yields go down making bonds worth less than what they were at current interest rates. Individuals relying on bonds in a volatile economy are probably going to suffer through yet another substantial loss not unlike what took place 10 years ago when the technology bubble burst. America is still digging out from the financial crisis caused by the real estate bubble bursting. Anybody currently holding bonds in their portfolio can request a review to determine if you should keep your bonds or sell them now. Simply contact our office for additional details.