Email of the day (2)
Comment of the Day

October 07 2013

Commentary by Eoin Treacy

Email of the day (2)

on the potential for an apocalypse
"I trust all is well with you. I wondered if you agreed with Faber in the above article. Schiff predicted the last big decline, but his alternatives were as bad as the rest of the market."

Eoin Treacy's view Thank you for this question and the associated article which highlights what I consider a very bearish and ultimately unlikely scenario.

Nevertheless, at Fullermoney, we believe that the 30-year bull market in Treasuries has ended and that a topping formation is still underway. Considering that “well to do people” as Marc Faber describes them, have a vested interest in protecting their principal, it is reasonable to expect they have significant bond holdings. If those positions are in bond funds rather than individual bonds, they are going to learn the difference between investing on a yield to maturity basis versus a capital appreciation basis. Afterall, bonds funds do not have a yield to maturity.

This also suggests that we are only at the beginning of a rotation out of fixed income into equities. While we see some short to medium-term risks for the stock market as QE is unwound, we regard the potential for a secular bull market to take hold subsequently as by far the most likely scenario.

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