Investors are urged to put their cash to work as yields decline

  • Cash is no longer king as yields on money-market funds are expected to decline
  • Investors who held cash missed out on the stock market’s rally last year
  • Bonds offer a healthier outlook with potential for higher total returns
  • Consider a three-pronged bond strategy: short term, intermediate/core, and speculative
  • Junk bonds and alternative credit can provide higher yields but come with higher risk
  • Investing in stocks at regular intervals can mitigate risk of buying at a peak
  • Healthcare and dividend-income strategies are sectors to consider
  • Follow the profits and focus on growth over value

Last year, cash was considered king with investors flocking to money-market funds and other cash proxies. However, the outlook for cash is dimming as the Federal Reserve is expected to cut interest rates, eroding yields. Holding cash for too long can have steep opportunity costs, as investors who sat out the stock market’s rally missed out on significant returns. Bonds offer a healthier outlook, with potential for higher total returns. Consider a three-pronged bond strategy, going from safest to riskiest. Junk bonds and alternative credit can provide higher yields but come with higher risk. Investing in stocks at regular intervals can mitigate the risk of buying at a peak. Sectors to consider include healthcare and dividend-income strategies. Follow the profits and focus on growth over value.

Public Companies: BlackRock (BLK), Vanguard (V), Pimco (PIMCO), JPMorgan (JPM), Janus Henderson (JHG), VanEck (VAN), Thornburg Investment Management (THNM), Osterweis Strategic Income (OSTIX), Primecap Odyssey Aggressive Growth (POAGX), BofA Securities (BAC), Vanguard High Dividend Yield (VYM)
Private Companies:
Key People: Rob Kapito (President of BlackRock), John Boyd (Founder of MDRN Wealth), Blair duQuesnay (Senior Investment Advisor at Ritholtz Wealth Management), Jeffrey Johnson (Head of Fixed-Income Product at Vanguard), John Klingelhofer (Co-Head of Investments at Thornburg Investment Management), Nicholas Colas (Co-Founder of DataTrek), Edward Yardeni (President of Yardeni Research), John Lynch (Chief Investment Officer for Comerica Wealth Management), Michael Rosen (Chief Investment Officer at Angeles Wealth Management), Daniel Wiener (Founder of RWA Wealth Partners), Savita Subramanian (Head of U.S. Equity and Quantitative Strategy at BofA Securities)

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Factuality Level: 7
Justification: The article provides information about the outlook for cash and bonds, as well as strategies for investing in stocks. It includes quotes from investment professionals and provides data on yields and returns. However, it does not provide a balanced perspective and may be biased towards promoting certain investment strategies.

Noise Level: 3
Justification: The article provides a clear analysis of the outlook for cash and bonds, and offers strategies for investors. It supports its claims with examples and data. However, there is some repetitive information and the article does not explore the consequences of decisions on those who bear the risks.

Financial Relevance: Yes
Financial Markets Impacted: Equity and fixed-income markets

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article discusses the outlook for cash and the potential impact on financial markets. It highlights the potential for investors to move their cash into equity and fixed-income markets, which could have an impact on these markets and the companies within them. However, there is no mention of any extreme events or their impact.

Reported publicly: www.marketwatch.com