Bollinger: Bearish on Bonds

01/10/2003 12:00 am EST

Focus:

John Bollinger

President and Founder, Bollinger Capital Management

John Bollinger has long been one of TV's most popular financial analysts. He is also well known for his Bollinger Bands, which have become a standard tool in technical analysis. He publishes the Capital Growth Letter and operates two Web sites, EquityTrader.com and FundsTrader.com. His top pick for 2003 is an unusual selection; rather than picking a favorite investment, his top advice is to sell bonds.

"My pick for 2003 is an anti-pick; I am recommending that the best investment move for the coming year is for investors to sell bonds. We believe that 2002 saw a secular low in interest rates and that going forward we will see inflation rekindled and interest rates rising. Additional upside pressure on rates in the first half of 2003 will come from seasonality; there is an annual uptrend in interest rates from mid-winter to mid-summer.

"Many investors have sought a safe harbor in bonds from the vicissitudes of stocks over the past several years. Unfortunately, that harbor is about to prove itself to be very dangerous to their wealth. If you don't think the danger is real, take a look at the Commodity Research Bureau Index of Commodity Futures. It is making a new five-year high. Bond buyers and bond holders beware, as inflation looms. Bonds are now a sell."

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