Maybe 2017 finally will bring an end to all that talk about a "Great Rotation" of investor cash from bonds to stocks.
In a broad sense, market watchers have been looking for the bond market to collapse for decades. But in practice, it hasn't happened. Investors keep shoveling cash into fixed income and pulling it out of stocks, despite an environment that would seem to suggest difficult times for bonds.
Still, predictions of a fundamental shift in behavior have persisted. But investors would be wise to tread cautiously when hearing calls that this finally will be the year when the Great Rotation happens.
"In the realm of investing, an example of 'fake news' is the claim by some market participants that a 'great rotation' will take place from bonds to stocks," David Kostin, chief U.S. equity strategist at Goldman Sachs, said in a report for clients. "Despite a sharp rise in interest rates during the past six months and a drop in the market value of debt holdings, we expect minimal asset rotation away from debt and into equities during 2017."
Over the past year or so, in fact, quite the opposite has happened. Even as bond yields have surged, which pushes price levels down, investors have bought bonds.