Never a Moment to Lose
February 17, 2012
The yield on 30-year Treasury notes at the close of business on Valentine's Day was 3.125%, according to Bloomberg.
For the 12 months ended in December, the Consumer Price Index for All Urban Consumers increased 3.0%, according to the U.S. Bureau of Labor Statistics.
Which means Treasury bonds are not a very good investment at this point, according to Kenneth J. Taubes, executive vice president and chief investment officer at US Pioneer Investments.
The 30-year yield only exceeds inflation by 0.125%. Every other Treasury of lesser duration is below the inflation rate. Are you willing to sell your customers an investment product that yields 1/8 of a percent a year for three decades?
Probably not. But right now, that's what investors want.
Or, that is, investors who happen to be in the Baby Boomer generation that is getting ready to retire. The Boomers, who cared not about money in their Flower Power youth, now seem only to care about financial instruments with fixed returns. Bonds or dividend-yielding stocks. Or mutual funds built on same.
It's a misplaced sentiment, said speakers, repeatedly, at NICSA's 30th Annual Conference and Expo last week in Miami. They will miss the equity rally of the next 10 years, they said.
Equities? Equities? The Standard & Poor's 500 is almost unchanged, for the last decade.
But that has to change, with the Fed keeping interest rates down, through 2014. "Equities will soundly outperform bonds,'' Michael W. Roberge, president and chief investment officer at MFS Investment Management, said.
Now is the moment to get your funds and your clients into equities. Once the move into stocks from bonds starts in earnest, it will be too late.
That's because almost any movement now happens almost instantaneously and flares worldwide.
The reason? Technology.
The smart phone. And social media.
In economics, like politics, the cell phone with a camera is an agent of change.
Whether to spur an Arab spring or to simply help new ideas cross borders, as William Lee, managing director of Citigroup Investment Research & Analysis, put it.
So precious is the moment that every moment now gets spoken for, by some sort of mobile app. Are you a mutual fund salesman spending time in an elevator? Great time to fill out a call report-that dreaded chore-on your smart phone, said Christopher P. Willis, chief marketing officer of Verivo Software. Or that expense report for the trip you're in the middle of, perhaps.
Yes, there's not a moment to lose. Particularly when you see 33 million Americans between the ages of 55 and 64 those with the greatest amount of assets blindly putting their wealth into the wrong investments.
Like bonds instead of stocks. Or exchange-traded funds for a day or two instead of mutual funds, for the long haul, as Taubes suggests.
This qualifies as evidence why "we've entered the greatest bull market in the history of advice,'' as posited by Bill Dwyer, the president of national sales and marketing for LPL Financial.
Act now. There's no time to lose.