Top bond investor Kathleen Gaffney thinks bonds are very risky, and has made stocks and cash a major part of her portfolios.
Gaffney tells WealthTrack’s Consuelo Mack that while the US economy’s performance should be leading to higher interest rates, some technical factors are keeping rates low. For example, she says that while the Federal Reserve is cutting back on its bond buying, the percentage of new Treasuries on the market that it’s buying is actually higher than it has been. Gaffney says she’s focused on fundamentals, and right now, the fundamentals are telling her that equities are all in all better values than bonds. She said that as the economy improves, and rates finally do go higher, bond investors could be facing some real problems.