USA Today: Craig Brothers quoted, “As rates rise, the antidote to volatile stocks could now be bonds. Here’s why.”
September 22, 2022
“As rates rise, the antidote to volatile stocks could now be bonds. Here’s why.” by Medora Lee, USA Today
Many analysts expect a recession in the next year, which means stocks may still have room to drop. “Equities could easily go down,” Craig Brothers, senior portfolio manager and co-head of fixed income at Bel Air Investment Advisors, said. “A true bear market is down 37%.” Year-to-date, the S&P 500 is down around 19%.
If you’re willing to take on a little risk, you can earn more on other bonds such as high-quality taxable municipal (munis) or corporate bonds, said Brothers. But be careful with corporate bonds, he said. In 2020, many solid companies saw their debt downgraded when economies closed to slow the spread of COVID-19 and their businesses were negatively affected. Those so-called “fallen angels” might offer higher yields on their bonds, but Brothers warns the full scenario of the slowing economy, higher rates and elevated inflation has yet to play out. “It’s best not to get too fancy,” he said. “You’re better off sticking with a high-grade portfolio, Treasuries, high-quality munis, taxable munis, high-quality corporates.” Many exchange-traded funds also offer ways to invest in bonds.
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