Most investors ‘just aren’t prepared’ for surging bond yields, fund manager warns
Stock markets wobbled last week as U.S. Treasury yields rose, and one fund manager has warned that equity investors are ill-prepared for the “pain” that’s coming.
Cole Smead, president of Smead Capital Management, told CNBC Tuesday that investors needed to balance whether a company is positively impacted by the economic recovery, or negatively impacted by how these recoveries affect “the price of money.”
“That dichotomy of the economy winning and the stock market losing, I don’t think investors have their minds wrapped around that at all,” Smead said.
Stocks can often fall as rates rise as large firms have to pay more to service their debts, causing investors to reassess the trading environment.
Reference: CNBC