'New normal' just a fad that could hurt retirees' plans
Retirees are in danger of seeing their investment portfolios meaningfully and detrimentally impacted by an unwinding of the latest fad. Indeed many are calling it the “new normal”. But it is just a fad and one that, like all fads, will end. Thanks to historic low interest rates – rates that aren’t justified by economic conditions and will therefore end – investors have employed a strategy of pursuing higher incomes from everything from farmland to investment properties and stocks. The greatest beneficiaries of this trend in the stock market have been large-cap, high-yielding companies and infrastructure stocks. The problem, however, is that high prices for both categories are not justified by their fundamentals. We have a warning for those who believe interest rates are going to remain lower for longer; Mark Twain once said whenever you find yourself on the side of the majority it’s time to pause and reflect. (VIEW LINK)
Roger Montgomery founded Montgomery Investment Management, www.montinvest.com in 2010. Roger brings more than two decades of investment, financial market experience and knowledge. Roger also authored the best-selling investment book, Value.able.