3 Lessons (and a song) for Navigating the Bond Market

I'm Jeff Rosenberg, BlackRock's Chief Investment Strategist for Fixed Income, and I'm pleased to join as a contributor to The Blog. I'll be sharing my thoughts on the bond market, currencies and commodities; my view of broad investment themes (often through the lens of my favorite songs and movies) and talking about where I believe investors can find the best opportunities in fixed income markets.

I've been investing, analyzing, and providing investment recommendations on the fixed income markets for over 20 years. But in the past five to 10 years, I've witnessed the bond market transform into a very different asset class. The rock anthem by The Who , "Won't Get Fooled Again," summarizes what I feel is one of the key issues today: investors have been fooled into accepting interest rates below the level of inflation. They are facing a bond market that has been turned on its head by what I like to call the "Dukes of Moral Hazard." It is caught between the incredible influence of central banks and their policy choices -- easy money and resulting low yields -- and the conflict those choices have with the seismic demographic shift toward retirement that is forcing investors to search high and low for income.

The forces shaping today's market require a very different way of thinking about the opportunities and risks in fixed income, and the role bonds play in an overall investment portfolio. This means you may need to change your approach to bond investing, and I'll be delving into these issues in future posts.

While today's markets are profoundly different from any that we've experienced, many of the lessons I have learned in my 20-year career can help you approach today's new world of fixed income.

Here are three of those lessons:

  1. Financial crises are the norm not the exception.
  2. Avoid an excess of greed during booms.
  3. Maintain flexibility in your portfolio to enable you to potentially take advantage of busts.

Now that we have a starting point, I look forward to joining in a conversation with you about strategies you can use to manage your bond portfolio.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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