The Bond Fallacy

The bond bandwagon has gotten pretty crowded these days, with big names like Rob Arnott and Gary Shilling both writing that bonds — not stocks — appear to be the best long-term investment vehicle. In his Return on Investment column for The Wall Street Journal, however, Brett Arends counters the arguments that the bond proponents (and in particular Arnott) have been raising. “Obviously bonds, especially Treasurys, held up well during last year’s crisis,” writes Arends. “And they can make an important part of a portfolio, especially at the right price. But anyone hoping for a repeat of the last thirty […]

Arnott: Value Stocks Priced at or below Depression Levels

Researcher and money manager Rob Arnott has made a lot of headlines lately with his focus on the bond market, but in yesterday’s Financial Times he keyed in on another asset class — and it’s one that he says is extremely cheap right now: deep value stocks. “Most investors,” writes Arnott, “do not yet realise that today’s spread between growth and value, on most measures, is nearly as wide as it was at the peak of the tech bubble. But this time it is the value stocks that are the extreme outliers.” In the tech bubble, he says, typical growth […]

What to Expect from Here

How quickly will stocks rebound when the current bear market ends (if it hasn’t already done so)? The New York Times’ Paul Lim offers some interesting data on that subject in his most recent column. Citing data from James B. Stack, editor of the InvesTech Market Analyst newsletter, Lim says that after the nasty bear markets that followed the peak of 2000 and the peak of 1973, stocks took more than seven years to climb back to their previous highs, and after the crash of 1929, it took more than 25 years to do so. Based on the average recoveries […]

Bogle, Siegel, O’Shaughnessy: Where Do They Have Their Own Money?

While they have been hit hard over the past year, many of the world’s top investors aren’t shying away from the stock and bond markets, writes The Wall Street Journal’s Eleanor Laise. In fact, many have been snatching up bargain stocks and bonds for their own personal portfolios while most investors have been fleeing the market. “A sampling of high-profile industry veterans, academics and brokerage-firm chiefs reveals that many are hanging on to holdings battered by last year’s market slide and busily hunting down new opportunities, particularly among bonds and beaten-down value stocks,” Laise explains “And they’re generally upbeat about […]

Arnott Sees Huge Opportunities in Bonds

Add Robert Arnott to the list of well-known previously bearish investment managers who are seeing value in the market. “I like investments, if I’m getting paid to bear risk,” Arnott tells Brian Milner of Canada’s Globe and Mail. “And right now, this is one permabear who is strongly bullish on a wide array of markets.” Among those areas are a number of bond markets, including investment-grade and high-yield corporates; emerging-market debt, and inflation-protected government bonds. Arnott also says that, apart from the most beaten-up sectors, the equity market is “broadly priced to reflect an expectation of recession. The bond market […]