“We really don’t know when short-term rates are going to go up,” he said, according to a transcript. “We’ve gone back and forth over the last couple years in terms of the signals that we’ve been getting from the marketplace, because economic growth has gone up and down, and we also don’t know quite what’s going to happen after the effect of ‘quantitative easing’ rolls off and so forth.”
Jacobson thinks the most important thing to avoid is hanging out in cash on the sidelines.
“I get a lot of pushback on this, but I think it’s kind of a dangerous idea, if for no other reason than there really isn’t anything to make in cash right now … because short-term rates being held very low by the Fed are so low that if you sit around in cash and we have any inflation whatsoever, your so-called real return, in other words that’s your return after the effect of inflation, are going to be negative, and you’re going to lose purchasing power,” he said.
Tisha Guerrero contributed to this article.