What should you do when the stock market gets unpredictable? You can hold on for dear life or you can hide your head in the government sand...

• There’s been a lot of ruckus in the stock market lately; between recession repercussions and the European debt crisis, investors are avoiding higher-risk, higher-return instruments in the stock market.
• Instead, people are funneling money into significantly lower-risk instruments that are also lower-yield, like money market funds and Treasury (government) bonds.
• The stock market is expected to improve in the future, but because of potential problems in Europe and a damaged financial infrastructure here in the U.S., investors are likely to stick to safe investments (like bonds) for now.

Facts & Figures

• The only mutual funds that outperformed the Treasury mutual funds in May were “bear market funds” – mutual funds that earn money only when the market goes down.
• Bear market funds returned an average of 8% on investment in May
• The going rate of return on a 30-year Treasury bond is 3.2%

Best Quote

“It’s still awfully close to zero. The amazing thing is that even at these rates, when you’re getting virtually no return on your money at all, people are still moving cash into money market funds. It’s sobering.” – Peter G. Crane, President of Crane Data

Tags: bonds, government bonds, risk, stock, treasury bonds