The desperate chase for yield is becoming dangerous, driving the valuations of dividend stocks (telcos, utilities & REITs) and bond prices to the sky. The main reason behind this 'new abnormal' is the world (especially developed nations) spiralling into a 'Japan-style' economic malaise.
- Aging populations result in weak demand
- Weak demand leads to deflation
- Central banks maintain low and even negative rates for longer in order to stimulate growth and battle against powerful deflationary forces. Central banks in Switzerland, Sweden, Denmark, and Japan now all have negative interest rates!
I foresee solid blue-chip yield stocks to be selling at a premium for many years to come as the global population age even further. The thirst for income will only get ever more frantic.
Japan gave us a dress rehearsal of a bleak future
DK
DK, wow I am glad I found your site and read this post. I couldn't agree more. Watch as we strive for yield and see very little or 0% real returns for the next decade or so. Not saying it will happen, but I've recently been writing the same thing and think it is a real possibility. Take it easy,
ReplyDelete