Bonds have outperformed stocks over the last 30-year period, but things are changing and bonds are no longer the safe haven they once were. In fact, bonds already look overvalued, and if rock-bottom interest rates keep moving higher, bond funds could plunge.
Major structural and cultural differences between the U.S. and Japan mean that Treasury bond investors simply using Japan as a template for how things will unfold here may be overlooking important factors. Key among them is a growing realization that Japan may have collectively opted for deflation.
Stocks enjoyed a respite from what some see as a bubble in pessimism, and that sudden turn should be unnerving to a fast-growing crowd of individual investors: those who have recently raced into ultrasafe holdings like U.S. government bonds.
With more big names raising concerns about overheated T-bonds, what's an investor with a Treasury-heavy portfolio to do? Some ideas: Consider corporate bonds or perhaps stick with government debt, but only short-term securities.