Title: Is The Bond Market In A Bubble? | Seeking Alpha
Headings: Is The Bond Market In A Bubble?
Is The Bond Market In A Bubble?
Summary
Bond Bubble? What Bond Bubble?
The Forces of Deflation are Real
Is There Any Value in Bonds at These Levels?
Why I Believe Everyone Should Own Some Bonds
EB Investor

Content: However, Japan's recent tax hike has caused serious challenges to economic growth, as we saw last year with a -6.8% GDP print in the second quarter. Weakness in velocity in Europe, Japan, and the US continues to put downward pressure on inflation, a condition that will likely continue, putting our own central bank on hold, as the markets question when the first rise in rates will be. Is There Any Value in Bonds at These Levels? Many have made the argument that there is little value in the US treasury market and investors would do much better in the stock market with high dividend yielding stocks. While this argument may seem to make sense, there are two fundamental differences that make this argument specious at best. First, a share of stock is in effect a perpetual call option on the earnings stream of XYZ company. There is no guarantee that the earnings will rise, and the down side remains up to 100% of the investment. The second difference is that there is no guarantee that the dividend yield will be safe, nor is there any implicit guarantee that it will be paid. Zero Coupon US Treasury bonds on the other hand are backed by the full faith and credit of the United States. They are purchased at a deep discount, and mature at par.