Courtesy of Mish.
I wish I could take credit for the the title of this post “The Stupid is Not Impossible” but it comes via an email from Albert Edwards at Society General. In turn, Edwards credits Breaking Views columnist Andrew Lapthorne.
In his post, Edwards comments that Japanese bonds are the only asset class to not suffer a decline since 2007. That analysis is deeply flawed since it does not factor in the decline of the Yen.
Yet, the bulk of Edwards’ post I agree with.
The title of Edwards email was “Forget Equities. Forget Smart Beta. Buy JGBs for the long run!” Edwards provided this chart.
The problem with the chart is it’s in “local currency”, the Yen. At these interest rates, yen-hedged, such advice will yield absolutely nothing.
Buying Japanese bonds now is a strict endorsement of buying the Yen. That’s not a recommendation I am willing to make.
Let’s move along to things in Edwards’ report I agree with. From Edwards ….
