Bonds Are Outperforming Stocks This Year

NEW YORK (TheStreet) -- Many Wall Street analysts and money managers made the wrong call so far this year by saying to avoid Treasuries.

Even with the Dow Industrial Jones Average and the S&P 500 Index setting all-time intraday highs this week, long maturity U.S. Treasury bonds have outperformed stocks so far in 2014.

Analysts and investors have forgotten that the stated purpose of the Federal Reserve's policy is to keep long-term yields low to spur bank lending. With the federal funds rate now projected to stay at 0% to 0.25% at least into mid-2015, U.S. Treasury yields have renewed their decline.

Analysts and investors forget that you can trade bonds like a stock. Their big mistake is assuming that investors will hold a U.S. Treasury to maturity, and so they opine that returns on the U.S. 10-year note yields trading at just 2.55% and the U.S. 30-year bond returning just 3.38%, Treasuries should be avoided. I have been disagreeing with that bad call.

I advocate buy-and-trade strategies, and if investors purchase exchange-traded funds, they should include a bond ETF.

Two "crunching the numbers" tables follow these profiles.

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