Bond market dislocation is just around the corner. When that happens, all hell is going to break loose.
My question is, what does one do that has a large chunk of their 401K in a "stable" fund heavily invested in bonds to protect it from wild stock market swings? Ideas anyone?
Could you flesh out what that means to us laymen?
When a government can decide who gets paid, who it can default on and the legal creditors are told to go uck-fay themselves the investors will return the salute.
Gulp: U.S. to lose AAA debt rating?
That will mean higher interest rates and much greater debt. We can cut the blow in two ways: Print, print, print and inflate ala Weimar or raise taxes through the roof to service the debt and regain our rating.
Where does that leave investors? I suppose stocks are somewhat sheltered from inflation as you own a portion of a company (and not the dollar) but under both scenarios (inflation and taxation) the economy (and companies) take a hit. Gold and commodities work too but you don't want to put all you eggs in one basket.
So where then?
Foreign stocks and bonds?
Any particular sectors fair better than others? I would say health care, but, given the push for Obamacare and their behavior with the auto companies and banks, it seems a lot riskier than would otherwise be the case.
Is it any wonder so much investment $$$ is still on the sidelines. Seriously, what reasonable options are there?