This vicious allocation shift could move investors from bonds to stocks and commodities, particularly.
Years ago clipping coupons from bonds was the province and passion of people in retirement.
Novitzky grew up in Burlingame, on the San Francisco peninsula, less than ten miles from Bonds.
Just a minor outflow of funds from bonds to stocks could cause an explosive stock market rally.
Since 1955 we are witnessing the lowest marketplace returns from bonds, against the the highest return in dividends.
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Stay away from bonds issued by nonprofit organizations like museums and universities or bonds issued by low-income housing projects.
If the equity markets are showing gains, investors tend to pull money from bonds and move it into stocks.
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Rising share prices and falling interest rates had prompted some of Brazil's mutual funds to switch from bonds to equities.
That's another reason to think stocks are more reasonably priced than bonds, a reason money has shifted to equities from bonds.
He says the reason pensions are underfunded is Wall Street convinced pensions to make a historic switch from bonds to stocks.
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With returns from bonds held back by low interest rates, U.K. insurers are becoming lenders as they look for investment alternatives.
Indeed, Mom and Pop investors need to be careful of the hype of the supposed great rotation from bonds to stocks.
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As I noted a last week, a shift from bonds to equities could provide fuel for even a stronger stock rally.
"The expectations of a big exodus from bonds are way overblown, " says David Santschi, CEO of TrimTabs Investment Research, a fund-tracking firm.
As I have been saying for several weeks, if we see a shift from bonds to stocks the rally could get exciting.
This may partially be due to the fact that some AAII members have already shifted their allocations, particularly from bonds to dividend-yielding stocks.
What to watch out for: housing and retail sales further strengthening, and investors shifting even more of their holdings from bonds to stocks.
V. say it often enough and loud enough then the public will suddenly decide to make that big asset allocation shift from bonds to stocks.
It could encourage some bondholders to shift from bonds to stocks.
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Secure your retirement with income from bonds, preferreds and convertibles.
The conflict is especially sharp with a traditional "income rule" trust, a popular format that allocates investment income (say, from bonds) to current heirs and reserves principal for future heirs.
It could be a few more years before the economy begins to churn out strong enough growth levels to trigger rising interest rates and an exodus from bonds into stocks.
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But, as he points out, velocity can slow because of positive events, such as consumers and businesses shifting money from bonds and other illiquid investments to cash so they can spend it.
Lastly, after the anxiety over Greek elections subside, and the realities of low interest rates for a very long time setting in with investors, I think there will be a significant outflow from bonds, bond funds and money market funds into commodities and stocks.
"Traditional trusts don't take into account that the inflation- adjusted, long-term return from stocks is almost four times the return from bonds, but this does, " says Stephan Leimberg, an adjunct professor at the Villanova University School of Law and author of the New Book of Trusts.
The outflow of money from stock mutual funds finally reversed to inflow in October, while the inflow of money into bond mutual funds has reversed to outflows over the last four weeks, and accelerated last week in the largest weekly bailout from bonds since October, 2008 (which took place just before bonds began a huge rally in November, 2008).
Currently, 38 states exempt interest on their own municipal bonds from state income tax, but tax revenue on bonds from other states.
But Mr Montier points out that the correlation of returns from different hedge-fund styles (which invest in a wide range of assets, from corporate bonds through to equities) has risen from around 0.3 in 1993 to 0.8 in 2009.
The yield on the benchmark 10-year Treasury is at 4.8%, down from 4.96% on Monday, an indication that investors are stampeding to the relative safety of U.S. government debt and away from corporate bonds rated Baa, whose yields have risen from 117 points above the 10-year Treasury at the end of last year to 134 above the mark as of Monday.
The rules also ban investors from profiting by buying bonds from underwriters at prices not available to typical retail investors, the people said.
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