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Two years ago Wall St. started lecturing us on the “great rotation.”
They confidently said the Federal Reserve would hike rates seven times in 2015 and 16. Their target of the US 10 year yield by the end of 2016 was 3.50% vs 1.70% today.
“It’s time to get ready for life after liftoff.”
The argument went, you must take down your exposure to bonds and add to stock holding as this historic rotation takes place, two year later we’re still waiting:
2016 Inflows vs Outflows (ETFs and Mutual Funds)
Bonds: +$53B
Stocks: -$85B
Bloomberg, IIF data
Last year, we told them they were wrong here.
When you see and hear this kind of “group think” from sell side analysts, run don’t walk the other way.
