By Jared Dillian via Iris.xyz

Interest rates are currently low.

That is by far the biggest concern among bond investors. They are drowning in worry about low-interest rates and their effect on bonds. So let’s address that.

Saying interest rates are currently low is another way of saying that bonds are expensive—which makes people not want to invest in bonds. Fair enough.

Stocks are also expensive—but you invest in those!

So why are you willing to invest in expensive stocks, but not inexpensive bonds?

What are your alternatives?

  • Cash
  • Commodities
  • Real Estate
  • Collectibles

None of those look appealing right now.

Here’s the reality of the situation. If you have capital to spare, you—as an individual investor—are going to end up putting most of it in the stock market and the bond market, because those are the deepest, most liquid capital markets.

I suppose you could go on strike, and keep it all in cash. One day that might make sense.

I suppose you could go on strike, and keep it all in commodities, but they are not cheap to carry.

Or real estate, but that has special risks.

Stocks and bonds—those are your choices.

So I ask you again: why are you willing to invest in expensive stocks, but not expensive bonds?

Yes, it would be nice if stocks and bonds were cheaper. But that is not the world we currently live in.

Read the full article at iris.xyz.

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