This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

An Argument Against Asset Allocation

"General, I have been with these Indians for 30 years, and this is the largest village I have ever heard of." -- Mitch Bouyer, General George Custer's scout.

NEW YORK ( TheStreet) -- Unfortunately, the warning went unheeded and later that day the battle of Little Bighorn River was over.

The U.S. Seventh Cavalry, including a force of 700 men led by George Armstrong Custer, suffered a severe defeat. Five of the Seventh Cavalry's companies were annihilated; Custer was killed, as were two of his brothers, a nephew and a brother-in-law. The total U.S. casualty count, including scouts, was 268 dead and 55 injured.

Custer was warned and he did not listen, he stayed the course. I have been sending out dire warnings about the bond market for the last several months. I hope you listened.

Here is what last week's massacre looked like:

Just about anything that looked, smelled or resembled a bond (except James Bond) got absolutely murdered this past week. It was not like there was not any advance warning. Even Custer -- without the help of modern day drones, satellite imagery, and wiretaps -- could have averted a tragedy if he would of listened to his scouts. Instead he stubbornly forged ahead and stayed the course.

I heard all kinds of excuses from many so-called financial experts leading up to this massacre.

Excuse Number One:

"Treasuries should be bought for the long term. You are now averaging down and buying them at a cheaper price."

Why would someone give lame advice like that? Stupidity, naivety, ignorance, or all of the above? Here is how that advice worked out:

Bonds have been perched on the precipice of a cliff for several months now, and it was just a matter of time before they took the plunge.

Excuse Number Two:

"You are invested in Treasuries protected for inflation (TIPS). You need an inflation hedge in your portfolio. Inflation is getting ready to rear its ugly head again."

Wrong again.

TIPS got scalped, too. Inflation hedge indeed!

Excuse Number Three:

"You are earning double tax-free income. You don't have to pay any state or federal taxes. You are still going to get your dividend checks. Why should you care if interest rates go up?"
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.19 -1.04%
FB $118.06 0.54%
GOOG $695.70 0.48%
TSLA $222.56 -4.20%
YHOO $36.00 -0.03%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs