There are no safe bets for investors anymore.
In recent months, a growing number of pundits and investors on Wall Street have expressed concern that the bond market, long considered a secure place to put one’s money, may be a bad investment going forward.
Treasury bonds in particular have hit new lows, with two-year notes dropping to a record low yield of .49%, while 10-year notes have a yield of just 2.52%, the lowest since March of last year, and just shy of the low that bonds hit in 2008 after Lehman Brothers collapsed.
Yet despite this, many Americans are flocking to bond funds, and U.S. Treasury bonds in particular, because they are concerned with the instability of the stock market and willing to pay more money on average to buy them. In fact, according to the Investment Company Institute, a whopping $46 billion has been removed from the stock market since May, when there was a brief market crash. Also, $77 billion has been invested into bonds during that time period.
Last week, the Wall Street Journal published a feature proclaiming the beginning of the Great American Bond Bubble. “Those who are now crowding into bonds and bond funds are courting disaster,” the Journal reported. The Journal explained that yields are currently too low for investors to make much, if any, profit at all and may actually lose out compared to investing in “stocks paying high dividends.”
However, the stock market is far from being a safe bet, either. As TheStreet.com reported recently, some are speculating that the stock market could suffer a crash in the not too distant future. In particular, TheStreet focused on the stock market crash predictor known as the Hindenburg Omen, which uses a set of technical data to determine the fate of the market. So far, the stock market has already signaled two Hindenburg alarms, including the realization that the stock market has had positive gains less than half the time during the past month.
And it’s not just stocks and bonds that have investors up in arms.