Lower Interest Rates On the Way...

Lower interest rates in the US – at Moneyweek.co.uk - the best of the week's international financial media.

Long-term interest rates are at 40-year lows. Could they possibly go lower? Economist Gary Shilling says they can. Before this bull market in bonds is over, Gary predicts that long-term interest rates in the U.S. will touch 3%. Before you dismiss Gary as crazy, you ought to know that he's been Wall Street's most correct interest rate forecaster for decades. As he said in the latest issue of Forbes: 'I've been almost alone since 1981 in consistently recommending the long bond.' He's been exactly right, all along...

Unbelievably, the bonds that Shilling has recommended since 1981 have actually outperformed stocks since the bottom of the stock market in 1982. No joke... Stocks have returned a fantastic 15% a year (compound annual gain) since the bottom in 1982. But the bonds Shilling recommends (25-year zero coupon Treasury bonds) have returned an astounding 21% compound annual gain since interest rates peaked in 1981. Wow!

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