I'd love to say I told you so about bonds....

Of course I'd love to say I told you so about bonds (getting hammered as I type), but being dead wrong on my bearish call for 3 years does not afford me the hubris to pretend I can time markets. Those of you who pay me to handle your stuff know that I have been, nonetheless, unapologetic in my subjecting your fixed-income allocation to subpar relative (to what we're used to) results. The thing is, the risk/reward relationship has been grossly out of whack when it comes to the bond market. I.e., the upside is minimal (below 2% until recently on 10 year money) while the downside has been monstrous (imagine what a sub-2% bond is worth when interest rates are rising). In other words, when interest rates are at history-of-mankind-lows there's very little room for price appreciation---and huge room for price depreciation---in an investment-grade (or otherwise) bond portfolio.

Of course if this (rising yields and falling prices) keeps up, there'll be opportunities to once again bring some yield into your fixed income allocation that we will want to carefully (remember bonds are supposed to be a stable part of your portfolio) exploit.

Stay tuned...