A large investor cannot simply hold cash in a bank account; they need to make an investment in some sector. Currently the 10-year Treasury note yields 1.58%, while Germany’s 10-year long-term interest rates yield 1.2% and Denmark is just over 1.01%.
Past News ReleasesRSS
New York, NY (PRWEB) July 12, 2012
In a recent Investment Contrarians article, editor Sasha Cekerevac states his belief that investors are losing faith in many places of the world and so are selling their shares first, parking their money in long-term interest rates, and asking questions later. He points out that with the European crisis continuing to unfold and very few places being “safe havens,” investors are piling into investments involving long-term interest rates, such as U.S. 10-year Treasury notes.
“A large investor cannot simply hold cash in a bank account; they need to make an investment in some sector,” comments Cekerevac. “Currently the 10-year Treasury note yields 1.58%, while Germany’s 10-year long-term interest rates yield 1.2%, Denmark is just over 1.01% and Japan is at 0.83%.”
What this tells you is that investors are running out of places to store their cash. There is no faith in the stock markets around the world, in Cekerevac’s opinion.
“We’re essentially entering a market in which risk is being avoided like the plague. At this point, investors don’t care as much about a return on their investments; they just want their money to be safe,” says Cekerevac
He points out that while large institutions might agree that they’re not getting much from long-term interest rates like the U.S. 10-year Treasury notes, it’s better than losing a ton of money in the stock market.
The time investors should look at getting into the stock market broadly speaking is when long-term interest rates actually start to rise, breaking this downward trend, suggests Cekerevac. That will be a sign that large institutional investors are selling their long-term interest rates, like 10-year Treasury notes, and redeploying capital into the stock market, he explains.
This is something that could take years to work itself out and no one can predict when this reversal work will occur, notes Cekerevac. But an end to the European problems must occur first before investors decide to wade into the stock market pool.
To see the full article and to get a real contrarian perspective on investing and the economy, visit Investment Contrarians at http://www.investmentcontrarians.com.
Investment Contrarians is a daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”
The editors of Investment Contrarians believe the stock market and the economy have been propped up since 2009 by artificially low interest rates, never-ending government borrowing and an unprecedented expansion of our money supply. The “official” unemployment numbers do not reflect people who have given up looking for work and are thus skewed. They believe the “official” inflation numbers are also not reflective of today’s reality of rising prices.
After a 25- to 30-year down cycle in interest rates, the Investment Contrarians editors expect rapid inflation caused by huge government debt and money printing will eventually start us on a new cycle of rising interest rates.
Investment Contrarians provides unbiased research. They are independent analysts who love to research and comment on the economy and investing. The e-newsletter’s parent company, Lombardi Publishing Corporation, has been in business since 1986. Combined, their economists and analysts have over 100 years of investment experience.
Find out where Investment Contrarians editors see the risks and opportunities for investors in 2012 at http://www.investmentcontrarians.com.