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Pragmatic Capitalism

Practical Views on Money & Finance

RICHARD BERNSTEIN: IS THE REAL “WALL OF WORRY” IN BONDS?

Here’s an outside the box thought.  When we think about the proverbial “wall of worry” we generally think of equities and their tendency to rally in the face of fear.  But in his latest note Richard Bernstein says the wall of worry might just apply to US Treasuries.  Given the persistent calls for a “bond bubble”, the idea that yields can only go one way (lower), and the general belief that the USA is going to suffer a Greek like debt crisis, it makes a great deal of sense that the real wall of worry is in the US bond market.

Here’s more via Richard Bernstein Advisors:

“Investors’ refusal to embrace treasuries remains very curious.  History shows well that diversifying asset classes tend to outperform. That has been happening with respect to treasuries for quite some time, yet investors refuse to embrace treasuries. Fears regarding federal finances, inflation, and the willingness of foreigners to continue to own treasuries have generally scared investors away from treasuries.

The proverbial “wall of worry” continues in the treasury market. When will investors realize that it’s not the 1990s, and that high-fee, alternative assets continue to offer inferior diversification opportunities relative to good old-fashioned stock/bond/cash asset allocation?”

Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC.Orcam is a financial services firm offering asset management, private advisory, institutional consulting and educational services.He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance and Understanding the Modern Monetary System.
Cullen Roche

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