market

Time was, stocks were riskier than bonds and should have the higher yield. But then came inflation…

AT THE START of this week, stocks on the Dow Jones, Tokyo Nikkei and FTSE100 in London offered a bigger dividend-yield than you’d earn in interest from their local government bonds.

“That’s pretty rare, and in general has been quite a good indicator of turning points in the markets,” notes the Financial Times‘ investment editor James Mackintosh. But it only looks rare if you ignore most of history. And it’s only screamed “Buy!” once on Wall Street, back in winter/spring 2009.

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Today I thought we’d follow up on a couple of the stories we wrote over the last week or so. Plus, we’ve had a rummage through the Money Morning mailbag to see some of the comments we’ve received.

We’ll head back to last week and our comments about property in our article, “How 70% of Property Investors Lose Money“.

To be honest, there wasn’t much in there that was new. We were simply restating our argument that most property investors have little to no interest in earning a positive cash flow from their investment properties.

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Worldwide markets are poised on a knife edge. We have seen the first signs of the “stimulus” rally of the past year and a half faltering during April and May this year. The ASX 200 fell 17% in a little over a month and since then we have seen the markets treading water between 4200-4600 in the ASX 200.

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Today your editor is working on the August edition of Australian Small-Cap Investigator. So while we try and tie-up a few loose ends, we’ll hand over today’s Money Morning to Dan Denning, editor of the Daily Reckoning.

The following essay first appeared in the Daily Reckoning last Friday, but I liked it so much I thought you’d like to read it too.

Incidentally, if you don’t know who Dan Denning is, he’s a colleague of mine in our offices here on Fitzroy Street, St Kilda. Dan has been writing financial newsletters for the past fifteen years and is currently also the editor of the Australian Wealth Gameplan investment advisory service.

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