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And Now for a Different Perspective - Gary Shilling Thinks Treasury Bonds Are the Place to Be in 2013

December 28, 2012 | About:

Interest rates that are so low they are basically rounding errors and money printing around the world is running rampant. Yet Gary Shilling thinks T-Bills are the place to be in 2013.

To me and people much smarter than me these Treasury bonds seem more like no-return and all-risk options right now, so it is likely smart to hear someone who sees things differently.

Shilling thinks bonds are the way to go because:

- He admits the bond bull market can’t last forever.

- He only buys Treasuries for appreciation; he doesn’t focus on the yield.

- His target on the 10-year Treasury is 1%.

- He thinks there is another five years of deleveraging ahead of us before we have to worry about inflation killing us.

- Stocks are not the place to be because there is no room for profit margin expansion which has been the key to earnings growth.

- He thinks $80 could be the earnings for the S&P 500 next year which is much lower than the $110 consensus.

- Shilling still thinks there is an excess inventory problem that is going to hold back the housing market.

I think I’d rather bury my money in a tin can in the backyard than buy a 30-year Treasury today, but maybe Shilling is right:

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