February 2010

Study this chart carefully. It holds the key to your investment future. Interest rates peaked at 19.1% in January 1981. If you bought thirty year Treasury Bonds then and put them into your safe deposit box, you have earned 18 or 19% a year in interest payments on your original investment and beaten the very best hedge funds. In the meanwhile, your bonds also increased in value. It was a golden scenario and yet most of us were completely averse to buying bonds in 1981. Interest rates had been rising for years and everyone who had owned bonds had lost money. Only 20% of investors were bond bulls then. Most people wouldn’t go near them with a ten foot pole. Does that sound like your approach to stocks today?