WSJ – The Bond Buyer’s Dilemma

The Bond Buyer’s Dilemma

The yields on long-term US Treasury bonds will likely fall below
inflation for years.  Fortunately, some reasonable alternatives
strategies exist for investors.


A few bits and pieces from the opinion piece:

Are we in an era now when many bondholders are likely to experience
very unsatisfactory investment results?  I think the answer is “yes”
for many types of bonds — and that this will remain true for some
time to come.

Artificially low interest rates are a subtle form of debt
restructuring and represent a kind of invisible taxation.  Today,
the 10-year US Treasury bond yields 2%

He then goes on to suggest a few alternatives to Treasury bonds:
(a) munis
(b) foreign bonds in countries that have better fiscal balances
(ie. Australia)
(c) blue-chip stocks with high dividend yields (ie. AT&T)

We’d add a few more alternatives to keep in mind such as high-quality corporates here in the US, and, for folks who are older, already retired, and perhaps living off of their portfolios, a portion of the income-generating part of their portfolio might be reasonably invested in an immediate fixed annuity.

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