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"Get out of bonds and into shares"


DÜSSELDORF. For years we got used to get less and less interest on government bonds. First it was the financial and economic crisis that left more and more investors looking for safety – and therefore operating in government bonds. Accordingly, prices rose and yields fell. Then there was the dramatic debt southern European countries. They lured investors, especially in German bonds. They are considered safe because of Europe’s largest economy is measured on its economic strength is less in debt than most other industrialized nations.

Worry that the strong economic recovery, combined with the extreme low interest rate policy by central banks to a flood of money and ultimately lead to an inflation is what makes government bonds with an annual yield of two percent fizzled completely unattractive, long time. Many investors are attracted by lower pre-interest bonds to shares, even if they yield far higher returns in the form of lush dividends.

But this time, apparently approaching an end. Since then the share prices rise further and further subject to the bonds. Accordingly, yields rise – which is easily visible from the current yield, in which many different German government bonds are combined with a term from two years. The rapid rise in yields of 1.8 to 2.3 percent in just nine weeks left its mark.

"The long-term downtrend remains formally considered still intact as long as the returns listed below 2.4 percent," restricts Lutz Mathes. But his choice of words "formal" and "still" make it clear where the journey, according to the former student and current head of the prestigious Hans-Dieter Schulz Chart offices in Darmstadt is: A fracture of the long-term downward trend is increasingly likely. And so therefore a return above the mark of 2.4 percent. "Moves the current yield on the mark, then waving quickly returns of three percent." He estimated only for a time frame of four to six months.

One reason for his assumption is that for weeks is any return to the previous low – chart technically undoubtedly a strong signal. In addition, Mathes tried the big fundamental picture, that is the view across to the equity markets. Here there was a rethink. Investors put more strongly on the risk ". Get out of the low-yielding bonds and into stocks, these shifts persist for some time," said Mathes is safe. The expert been able to gain much of this behavior by investors. The strong economic recovery, which tend rapidly rising corporate profits and the rich dividend yields unique to the stock market.

Even if the jump is not about the brand of 2.4 percent is possible, Mathes expects no means a resumption of the decline in bond yields, as investors have already experienced such a long time. More likely is a sideways movement – then an up-and-down swing in proximity to current yield levels.