Break Out the Barbell, Part I
I played hooky much of the day Wednesday. At the invitation of a longtime Real Money reader, I attended a spring training baseball game, taking in the sunshine and baseball-related conversations, though we did touch on the markets in the aftermath of Ben Bernanke's testimony on Capitol Hill. The Federal Reserve chairman consoled markets, saying that the majority of Fed governors favored continued quantitative easing and that the practice would continue for the foreseeable future. He said that the need to support the economy outweighed the risk of creating asset bubbles down the road. He sees no such bubble at this point, apparently.
This is a hard blow for traditional income investors. Rates are going to remain low for an extended period. Low-risk, interest-paying instruments such as Treasuries, CDs, municipal and even corporate bonds are not going to pay a high enough rate to provide the income needed to support a pre- or post-retirement lifestyle for many people. I am amazed that seniors groups have not stormed the Hill to protest the changes wrought upon them by the Fed's Zero Interest Rate Policy. Money is basically forced into riskier assets, and this can put principal -- even basic financial security -- at risk....608 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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