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Call The Old Guys When Yields Rise

Dear Rundown Reader,

When 10-Year U.S. Treasury yields rise, who are you going to call for advice?

We hope it’s not your hot-shot, millennial broker.

Why?

Because though they served you well in the past, they’ve never seen market conditions like we’re seeing right now.

What should you do when U.S. Treasury yields rise?

Call on the old guys.

Here’s why.

Your Rundown for Wednesday, May 16, 2018…

Time To Diversify Your Brokers

Big week for U.S. Treasury bond owners.

The yield on the 10-year Treasury rose over 3% this week hitting its highest level since 2011. Following suit, the two-year yield hit its highest mark since 2008.

Here’s the year-to-date 10-year Treasury chart.

Truth is, market conditions are changing.

Interest rate hikes, prolonged market chop, rising oil prices, and higher bond yields are the norms right now.

And as Fundstrat’s Tom Lee noted to CNBC: “Ill-equipped investors may be set for a rude awakening if the rising-rate environment continues.”

Folks need a strong knowledgeable broker to guide them through this new market.

However, as new data shows, your average broker has never seen conditions like this before. And therefore has no idea how to play it.

CNBC reported yesterday that “the median tenure of an active equity manager is eight years.”

And JPMorgan portfolio manager Timothy Parton also notes in the CNBC report:

“There are a lot of people that haven’t been through many things in this youthful industry.”

Point is, unless your broker has 10, 15, or 20+ years of experience, they’re not prepared for the new market norms.

Now we’re not suggesting you run out and dump your broker if they’re under 40.

Chances are they’ve served you well. It’s not their fault they were born in the 80’s.

But when it comes to playing this new market, you may want to call on the old guys for advice.

As it turns out, we at The Rundown have the perfect guy.

Mike Burnick is a time-tested, proven market expert, with over 25 years of money management experience.

And he would tell you things like:

“Yes, bond yields are at a high point. But they’re not a good bet for my money. Over time, rising inflation will erode away most of your gains. Instead, look to high-quality dividend stocks for your long term growth plans.”

Try getting advice like that from your hot-shot, millennial broker.

For more of Mike’s top-shelf income generating advice click here.

Now, turning to the markets this morning…

Market Rundown for Wed., May 16

From a recent letter:

“How about adding the 10-year Treasury interest rate in the Market Rundown”

Good suggestion. For today, and moving forward.

Yield on the 10-Year Treasury sits at 3.069% this morning, down 0.011.

S&P 500 futures are down 1.25 at 2,707.

Oil’s down $0.32 at $70.99.

Gold’s down $3.60 to $1,286.

Bitcoin goes for $8,387 this morning, according to CoinDesk.

We’ll talk again on Thursday.

For the Rundown,

Aaron Gentzler

Aaron Gentzler

 

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Aaron Gentzler

Aaron Gentzler is the Publisher of Seven Figure Publishing. He's been researching and writing about technology and markets for over a decade and is a graduate of Penn State and Johns Hopkins.

View More By Aaron Gentzler