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Tuesday, June 4, 2013

Some Gleanings from the WSJ of the Last Few Days

I think I can remember the last time I saw a headline like didnt't end nicely WSJ May 31
The 100% Stock Solution

....and so much for taking advice from a professional in a newspaper for your asset allocation. I dont have time to go through all my objections to a portfolio like this and I dont want to beat up too much on a colleague.. But the advisor has apparently bought into the latest" it's different this time" mantra "bonds as a substitute for stocks". As is usually the case this works for awhile and the outcome ultimately is not pretty. Stocks are not bonds or a substitute for them.

I have been expecting this for quite awhile..and it could be just the beginning.

Dividend Stocks Fall Victim to Fed

Utilities, REITs, Other Sectors That Benefited From Aggressive Bond-Buying Program Take a Hit

Stock investors are getting a taste of what could be in store with a sustained rise in bond yields.
A month of sharply climbing U.S. Treasury yields culminated last week in an abrupt selloff among stocks that had been posting big gains thanks to demand from income-hungry investors.
Hardest hit were utilities, telecommunications stocks and real-estate investment trusts, all of which had benefited from the Federal Reserve keeping government-bond yields at rock-bottom levels. The Fed's extraordinary stimulus policies, which have pumped billions of dollars into the financial markets, had caused investors to seek out income in riskier fare, such as stocks that pay high dividends.

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