Friday, April 14, 2006

Take Another Look at Bonds and Treasuries

Even though the market is closed for the day, interesting story over on The Street by Marc Lichtenfeld and two points stand out to me:

1. According to the 2006 Stock Trader's Almanac, $10,000 invested in the Dow Jones Industrial Average on Nov. 1 and sold on April 30 of every year going back to 1950 would net the lucky investor nearly $490,000 for an average 7.9% return. Meanwhile, $10,000 invested and sold during the opposite time frame (May 1 to Oct. 31) would have lost the investor $502. So much for the idea that stocks always go up over the long term.

2. Regardless of the calendar, interest rates appear to be headed higher. John Roque, a technical analyst with Natexis Bleichroeder, expects the yield on the 10-year Treasury note to hit 6%. On Thursday, the benchmark note's yield rose above 5% for the first time since mid-2002, settling at 5.05%.

Maybe it's time to take another look at bonds and Treasuries....

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