As of now, it is pure speculation as to what (if any) policies the new administration might offer could serve to impact investor portfolios. As a recent presidential candidate, Donald Trump has made reference to a market bubble and plenty of commentators have noted that a rise in interest rates could potentially result in a decline in stock values.
During the course of the election night, as a Hillary Clinton loss and a Donald Trump win became closer to reality, the Dow market futures reacted by falling over 600 points. By early morning Wednesday after election day, the markets not only steadied, but in the first few days following the election the stock market appeared to have a short term rally.
With all of the political commentary in the news, and the stock market reacting the way it did, it was easy to get lost or distracted and many have not noticed that the bond market has been quite volatile. Longer term bonds have been taking a beating recently. With predictions of a rising interest rate environment and a possible increase in interest rates by the Federal Reserve, we are likely to see more of the same over the next several weeks.
For many investors, especially after the 2008-2009 financial crisis, investments in bonds were considered a “safer” alternative compared to the volatility of the stock market. The recent prospect of a rising interest rate environment is something many recent bond investors are not familiar with and have had little or no experience dealing with in quite some time. Many predict that if interest rates rise 3%, 4%, or 5% the bond markets could potentially see losses of 20%-30% or more over the next few years. This poses a potential risk in many cases to risk-averse investors such as retirees who are the most vulnerable and exposed and the least capable of handling such declines in their investment accounts.
What’s more, this could result in a spiral effect where the rates are going up, the bond values are decreasing , and, if (issuer) company performance weakens, the bond ratings could go down. The spiral effect of lower values and lower ratings could leave many investors on very shaky ground, especially if there is a rise in bond default rates, as that could wreak havoc for many investor portfolios.
If you have experienced investment losses in your bond holdings, or elsewhere in your portfolio, it is important that if you wish to take advantage of your legal rights, you take action promptly. FINRA rules outline time limits for submitting claims to arbitration. The rules allow for claims to be filed within six years of the occurrence or event giving rise to the cause of action. However, time restrictions called “statute of limitations” could also apply in some jurisdictions and they may be shorter than six years.
To determine whether or not you have a potential claim, or whether or not there are time limitations that may serve to potentially bar any claim you might otherwise have, please call the securities arbitration and investment litigation lawyers at Silver Law Group, David Chase, LLC, and Ciklin Lubitz & O’Connell at 800-975-4345 to discuss your rights and potential remedies. We are currently investigating cases related to investments in bonds both in and outside of the oil, gas, coal, and energy market sectors. Call for a free consultation, or you can also visit us at Oilgasfinraarbitration.com.