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♟ Is This the Perfect Time to Buy Bonds?

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Editor's Note: Earlier this week, the Federal Reserve hinted at more interest rate hikes in 2024... so we wanted to let you in on an important opportunity.

In today's guest article, our friend Marc Lichtenfeld, the Chief Income Strategist at The Oxford Club, is talking about several plausible scenarios that could make bonds even more valuable than they already are.

He's also showing investors how he's loading up on fixed income for the foreseeable future.

Click here to learn more about his latest fixed income play.

- Ryan Fitzwater, Publisher


"After years of record-low interest rates, bonds are finally sporting decent yields."

Marc Lichtenfeld, Chief Income Strategist, The Oxford Club

Marc Lichtenfeld

In the latest episode of my State of the Market video series, I talked about how there's no such thing as a Goldilocks, or "just right," market. Investors often think the market is too hot or too cold to put new money to work.

You can always find a reason not to invest. But there's a way you can invest your cash, earn interest and not worry about losing money.

Bonds.

Notice I didn't include the word "funds" after. Like Elvis and the hound dog, bond funds are no friend of mine. I'm not a fan.

If you invest in a bond fund and rates go higher, you are nearly guaranteed to lose money because bond prices fall as interest rates rise. As a result, the value of the bond fund will fall as well.

If you own individual bonds, the same is true (bond prices will fall if interest rates go higher), but that is irrelevant if you plan on holding the bonds until maturity.

Bonds mature at $1,000 no matter where they trade beforehand. You could own a bond that's a real dog and trades all the way down to $800. And at maturity, it will be redeemed for $1,000.

The only way that won't happen is if the company goes bankrupt. So barring that rare occurrence, bondholders will get their money back - or earn a profit if they were able to buy the bond at a discount - and collect income along the way.

Here's why I'm so excited about bonds now. After years of record-low interest rates, bonds are finally sporting decent yields. You can get bonds of high-quality companies with 6% or 7% yields. I'm talking about companies like JPMorgan Chase and Ally Financial.

And the timing couldn't be better.

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Currently, the economy is strong. Despite everyone's fears of recession, unemployment is near record lows, wages and productivity are rising, and more dollars are being invested in the U.S. by overseas companies than ever before.

Inflation is still too high, and I suspect it is not under control yet. So we could still get some more interest rate hikes, but we are likely going to see the end of the rising rate environment. And should the economy sputter and we fall into recession, rates will come down, which will make the bonds that you hold more valuable.

If you own a bond yielding 6% and interest rates drop next year, an equivalent bond may then yield 5%. So your 6% bond will jump in price because it's more desirable. Eventually, it will rise in price enough to yield 5% - for someone else. Yet you'll still earn 6% until maturity. Or you could sell the bond for a profit at the elevated price.

Remember, bonds are called fixed income assets. The interest won't vary; it will stay fixed. If rates drop, you'll continue to earn the same yield as the day you bought the bond. So today's bond yields may be even more attractive in a year or two if interest rates decline.

I haven't seen a better opportunity in the bond market in my 16 years with The Oxford Club. Yields are strong, and if a recession occurs, as many still expect, bonds that are bought today will be big winners, generating lots of income.

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YOUR ACTION PLAN

While bonds are strong right now, there's another simple hack for alternative income that could pay up to six times as much income as an average S&P stock... while also keeping your principal protected.

I reveal this latest fixed income play in THIS free video.

I consider it "Wall Street's Best-Kept Income Secret," because this alternative asset could produce gains as high as 1,984% in three years.

Go here to REVEAL WALL STREET'S SECRET.

Bonds are the perfect Goldilocks investment for today's market.

I'm loading up on fixed income in my personal account. I recommend you do the same.

Good investing,

Marc

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FUN FACT FRIDAY

Make That Crumpled $20 Bill in Your Pocket Look ATM Fresh. U.S. currency is actually fabric - it's made up of 75% cotton and 25% linen. So if you want to make your money look brand-new again, try pressing it with your iron. If you set the iron on LOW HEAT, put a towel under the bills and iron the money in a circular motion... Presto! You'll have a crisp bill that will look like it came straight out of the ATM.

 

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