Bernstein: Take Risks in Stocks, Not Bonds
Investors should stay away from risky asset classes in fixed income and stick to Treasuries, money markets, and CDs, says Bill Bernstein.
Christine Benz: Bill, I want to talk about fixed income. This has been a vexing area for a lot of investors. I think they look back on the past couple of decades and see that returns have been genuinely very good, in part because we've had this tailwind of declining interest rates, but maybe the next couple of decades won't be so profitable. How would you think about positioning client portfolios at this juncture? What do they look like? What do your client portfolios look like--fixed income?
Dr. William Bernstein: Well, I try not to talk too much about what we do with clients--it's just a confidentiality and a privacy matter. But I've always felt that people should be taking risks on the stock side and not on the bond side. At the end of the day, there are really only two assets. There are risky assets and there are riskless assets, and then there is an exchange rate between them.