How can you tell when the bulls are in full panic mode as
their favored asset crashes?
Simple: when they start blaming other people for their losses.
Think of "blame" as a stage of investment grief.
Case in point:
Last Tuesday, Douglas Hodge, Chief Operating Officer of bond
giant PIMCO said that "the financial media is partly to blame for
the huge movement out of bonds."
His statement comes on the back of an acceleration in bond
outflows over the past month that reached over $70 billion.
That's a big move - even for the trillion dollar world of bonds.
In fact, it was a historic move - the biggest outflow since
But the COO said he believes net inflows to bonds will return
over the long-term.
That might be so…no one has a magic crystal ball…but we also
know that Mr. Douglas has an agenda…his company PIMCO benefits
directly from a "return to bonds."
But when he goes as far as blaming the media for the recent
exodus from bonds his opinion is discredited immediately. Douglas
should know that NO bull market lasts forever. And though the 30
year bull market in bonds seemed to be bulletproof - it's showing
definitive signs of ending.
Just look at the move in the highly-liquid iShares 20+ Bond
) below. Over the past three years we've seen bonds skyrocket to
bubble proportions. But the long bond bull market seems to be
crashing - after years of defying gravity.
In fact, back in late 2011,
I stated the following
The 10 year chart of the
iShares 20+ Year Treasury Bond Fund (
above is evidence of how interest rates and the bull market
in bonds has evolved since 2003. If you look towards the blue
oval you will notice what should be the final stages of the
decade long bull market in bonds. There is no doubt that the move
in 2011 has been parabolic with Treasury bonds soaring over
Fortunately for the bond bulls, given all of the world's
troubles, 'the safety trade' still looks intact. But, how much
longer can rates stay at record lows? Realistically, the reward
is now to the downside."
And indeed it was. Now TLT is trading for roughly $106 and
seems to be in full bear mode, selling off which each small
The price action tells us one thing - but the panic from the
likes of the Pimco COO gives us confirmation - the bond bull
market is over.
The bubble in bonds has burst.
Ian Wyatt, my colleague and founder of Wyatt Investment
He recently stated, "
bonds, the traditional income investment, are simply too
dangerous. I say that because I'm convinced we are at the end of
a 30-year bond bubble that's about to burst. Interest rates are
rising, and I expect them to continue to rise for years to come.
That's bad news for bonds and other fixed-income
So what's the answer?
Ian just finished a special report titled
The Bond Bubble Survival Guide for
High Yield Wealth
It's a must read for every income investors. In this
report, he lays out the interest-rate scenario that's likely to
unfold over the coming year. More important, he offers the best
investments that enable you to build wealth and prosper as
interest rates rise.
Best of all, this report is free to all
subscribers. If you're not a subscriber,
to take a closer look at
The Bond Bubble Survival Guide
. Of course, you'll also receive all the other valuable
High Yield Wealth