Wednesday, November 2, 2011

Big Rally in Stock Market

What a month it was for stocks! The last 4 weeks has seen an almost 12% rise in the Dow Jones Industrial Average, yet the year-to-date performance is only slightly ahead of the various bond indices. We continue to believe that stock performance over the next 5 years will be only marginally higher than bond performance, yet the stock market volatility will be dramatically higher. For those who have had a reluctance to take on stock market volatility, fear not. If stocks and bonds perform as expected, your bond results should not be too different than the stock market's results.

As interest rates eventually begin to rise, Blue Haven Capital is poised to take advantage of the opportunity for our client accounts. We continue to recommend a balance between short and longer term bonds and an emphasis on higher coupons. Why higher coupon bonds? See this post from 2009 for a quick explanation.

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