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That's not what he's saying. He's saying this: 1. Bond prices are inversely related to interest rates. Interest rates have been declining for 50 years. They a
by jeffreyrogers 6y ago
That's not what he's saying.
He's saying this:
1. Bond prices are inversely related to interest rates. Interest rates have been declining for 50 years. They are now near 0. They probably can't go much lower, so they can really only go up.
2. If they go up, bond prices go down.
3. Institutional asset managers with obligations (e.g. pensions, budgets) already cannot meet their obligations with the yield from bonds and the bonds are unlikely to appreciate in value.
4. Therefore, it makes no sense for institutional asset managers to be invested in bonds because thta will pretty much guarantee that they will be unable to meet their obligations.