Like most other people I enjoy confirming my own biases. So, when I hear the best bond manager in the world tell the world something that I’ve been saying for years (that there is no bond bubble) I will feel inclined to write a blog post about it so that you think I am smarter than I probably am. In this case though, you just get to hear the thoughts of Jeff Gundlach courtesy of Josh Brown who saw him speak last week:
America does not “over-own” bonds.”Raise your hand if you own a Treasury mutual fund for yourself or your clients…” No hands go up in the entire room (maybe out of embarrassment or because the salads were served).
If anything, relative to the rest of the developed world American households over-own stocks and are perhaps equal to the rest of the world in terms of bond holdings. The below chart is Net Worth in Financial Assets by Country, the black portion of the bar is bond ownership and the dark blue is equities:
There’s no bubble in bonds. Gundlach is amused by those claiming that the bond market is on the verge of some kind of imminent collapse. “They’re dead wrong.”
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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