Our thesis has been, and continues to be, that dividend paying stocks and bonds are not correlated over the long run. Income investing is likely to become a “cocktail” of various instruments in a rising rate environment, and Converts and Tips could be decent components of the mixture. Normally, gold would be rallying on inflation fears, but in this case it is not. Our best guess is that the market is suggesting that inflation will be under control for at least the first part of the Trump economy.
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