The best money managers ten years from now are paying their dues today. Historically, it is hard to find a more difficult time to be involved in the markets. Generations past had their antagonists, but the combination of wild inflation, rising interest rates, slowing world economic growth, slowing corporate earnings, reckless investing and the dominance of algo investing should be enough.
Now, we have a newer entrant to the market mess: competition. For the past several years, an income investor really had limited options for generating that income. A common stock with a solid dividend was often the best alternative, but at the price of market risk. You were getting some income but your principal was at risk. Recently, the one and two year Treasury Bonds have been yielding close to four percent. These are backed by the full faith and credit of the U.S. Government. Simply, you can buy a bond and get a decent rate of interest over a relatively short period of time.. In addition, you are guaranteed to get your principal back when the bond matures.
The fact that income investors now have a choice cannot be underestimated. Rising short term treasury rates are a threat to stocks, stable value funds, large cash balances and many other investment vehicles.
This article is meant to be for informational purposes. It is written from my personal opinion and from informational sources believed to be accurate. It is not meant to be investment advice, and should not be construed as such. I do not recommend buying or selling any of the stocks discussed. All investments bear risk and your on due diligence should be undertaken to determine which investments are most appropriate for you.