“Investors who have U.S. Treasurys are not convinced that now is the time to sell, as their primary goal is the return of their money rather than the return on their money,” he says. “They’re not looking for capital appreciation or income; they just want their money to be safe.”
That perceived safety of bonds could prove illusory at these levels, according to Larry Luxenberg, a financial adviser with Lexington Avenue Capital Management in New City, N.Y.
“While these short-term fluctuations in stocks can be unnerving, the long-term potential of stocks remains attractive," says Luxenberg. "Investors have gotten conditioned to be too pessimistic about stocks, and they need to consider the possibility that there could be a brighter future for equities."
Indeed, investors today remain confused because although stocks look attractively valued for the long term, their emotions are whipsawed by almost daily fluctuations in the global equity markets and constant reminders that another Lehman-like catastrophe could be brewing in Europe. At the same time, they are being advised by bond experts that Treasury bonds are likely the next bubble.
“Investors also have to realize that when it comes to ‘news,’ if it bleeds, it leads, meaning bloody stories sell,” adds Stovall.
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