• The US debt crisis threatens more market volatility.
• Ryan Payne suggests investors to look into stocks rather than bonds as the bond market is a “dangerous place” at this point.
• Payne recommends diversifying into value stocks and overseas markets for better returns.
US Debt Crisis Looms
The US debt crisis has put an additional strain on retail investors, leaving them unsure of whether to invest in bonds or stocks.
Bonds vs Stocks
Bonds are debt securities issued by governments, municipalities, or corporations to raise funds from investors willing to lend them money for some time. On the other hand, stocks represent ownership of a fraction of the issuing corporation and may yield better returns depending on the Federal Reserve’s policy.
Payne Warns Against Bond Bubble
Ryan Payne, President of Payne Capital Management (PCM), warned against investing in the bond market as it is a “dangerous place” and suggested hedging against the 10-year benchmark and instead diving into underpriced equities such as value stocks and overseas markets for better returns.
Risks Involved in Investing
Although investing in stocks may be more profitable, they still fall prey to overall policy changes and can yield lower interest during times of high volatility. Therefore, it is important for investors to take risks into account when making decisions about their investments.
Investors should turn away from bonds and focus on diversifying their portfolio with underpriced equities such as value stocks and overseas markets during this period of US debt crisis for better returns while taking risks into account when making investment decisions.