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Fulcrum Securities Chief Investment Strategist Rob Morgan on the increasing number of investors shifting from bonds to other assets such as stocks.
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A -- a whole lot of -- -- pointing to an improving economy her -- Many individuals though now fleeing from the bond market and putting their money into riskier assets like stocks and commodities.
Rob Morgan is the chief investment strategist of fulcrum security is an investment advisory firm.
Welcome back to the show robberies prior by this move.
You know Jerry I'm I'm not surprised.
So many market watchers have been saying no we're gonna get more quantitative easing we're gonna get more bond purchases and we've had three months in a row now of 200000 jobs I mean the -- The Fed is gonna have they're gonna have to break their pledge of keeping rates where they are to -- -- May that that -- seem crazy.
I I absolutely agree with few and then what's even crazier Jerry is now on a quarterly basis they're releasing these these interest rate expectations of fed members and their disagreeing.
We have.
That's six out of the seventeen fed members as said they expect rates to go this year next yet he'd be.
You know the wizard of -- says no no it's not in the well nothing's gone up two point.
At the same man who said we didn't -- inflation and that turned out to be -- Let's talk about bonds for second -- a bad idea head to be overly invested in bonds right now.
Well so.
Rates or rates are gonna have to go up at some point and I and I think so many bond investors were sticking in -- because is that while there will be some more this quantitative easing and and of course a lot of people thought this would this realization of no more that would hurt stocks too but so many more people were in bonds and now they're getting -- and -- we're gonna go.
What we're gonna -- into stocks and that's that's why bond yields have been going up and and stocks obviously what happens what if you.
Hold bonds aware at large allocation let's say of bonds at a time when interest rates are rising inflation is going higher.
Well you you want to be in shorter -- to -- we would recommend to our end and to our clients flattered portfolios staggered maturities.
But.
Don't hold a lot of thirty year bonds hold more hold more five year bonds and thirty year treasuries or corporates.
Probably.
Well Amex definitely Amex probably have probably a 5050 mix and of course -- the tax bracket and warrants it.
-- tax free bonds as well I you.
That that would play a role as well but they they really should be treated more like stocks in -- -- because they because in the long run all adults very volatile and they and they act more like stocks which are.
What how this is -- stocks just.
Lord knows that in another day or two it'll probably be backed down just enjoy it while you can.
Do you think we can continue at this trend.
I did I do your eye at the beginning of the year ahead a target audience appeal 14100 while we're there we're -- -- -- where they are so I recently raised it to 15100 -- if we even if we make 15100 if if and and I think at some point this year we will.
That's that's fifteen times earnings on the S&P that's still below.
The historic norm and in a low inflation environment twenty times earnings has been sustained.
For periods of years so I'm not saying we're getting -- anytime soon because we're not.
But but I I do think that this rally can be system -- -- our -- -- -- rob thanks for coming on --
