Time To Short Stocks And Buy Bonds?

thinks the trade is a slam dunk right now:

After a sharp bear market rally, people are feeling better about stocks.  But corporate bonds have not bought into the stock market rally.  Aside from noises from the US government, whose actions may or may not pan out, there is little reason for optimism in the real economy, as GDP continues to shrink.

At a time like this, I reissue my call to sell stocks and buy corporate bonds, even junk bonds.  When the advantage of corporate bond yields are so large over the earnings yields of common stocks, there is no contest.  When the yield advantage is more than 4%, bonds win.  It is more like 6% now, so enjoy the relatively stable returns from corporate bonds.

(via CrossingWallStreet)

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