Bond Market Down Bad, Investors Call It "Value"

The bond market got bludgeoned this year. Now investors see hope. That's what every victim says right before the second bludgeoning.

Bonds are the asset class your dad owned so he could sleep. He slept fine. Then rates rose, prices fell, and he started checking his statements at 3 a.m. like a man reading a ransom note.

Now Wall Street says the wreckage looks attractive. Higher yields. Better entry points. Opportunity. This is how a realtor describes a house with no roof.

Here is what I know. A bond pays you interest and returns your money at the end. Sounds boring. It was. Boring was the whole product. The market took the one thing designed to do nothing and made it do something. Impressive. Terrible, but impressive.

I'm a technical analyst. I look at charts. The bond chart this year looks like a ski slope designed by someone who hates skiers. Nobody on that slope is asking if it's a good entry point. They're asking where the lodge is.

The retail crowd will arrive late, as tradition demands. They'll buy a bond fund after reading this headline, then call it a "fixed income strategy" at parties. Nobody at the party will ask. Nobody ever asks.

Maybe they're right. Maybe the bottom is in. Maybe the bludgeoning is over. Or maybe the market is just resting, the way a boxer rests between rounds, before remembering you're standing there.

Hope is a fine emotion. It's also what the guy at the casino has at 4 a.m. holding a loyalty card.

Buy the bonds. Your grandchildren will inherit them, along with the hope.

Photo by Anne Nygård on Unsplash