"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:
Terrible advice. What good is a 4% dividend if your principal loses 14%? That is a net loss of 10%. Do they still teach arithmetic in school?
I tweeted (@BillGunderson) on Thursday that the above chart of muni bonds was the worst chart that I had seen all day. Excuse Number Four: "High-yield bonds are still the best place to get an attractive yield." Bad advice again. Junk bonds are just as susceptible to rising interest rates as any other kind of bond. The chart above still looks like it still has a long ways to go on the downside. Excuse Number Five: "Who cares about what America does with its monetary policy, we own foreign bonds, they could care less what Federal Reserve Chairman Ben Bernanke does." No! Rising rates in America infect the global bond market, too. Sovereign debt indeed. Shaken and stirred! So, do you still believe in staying the course with an asset allocation model? Follow @pwstreet This article was written by an independent contributor, separate from TheStreet's regular news coverage.