Mel Lagomasino on CNBC: Debunking Fixed Income Investing Fears
October 2, 2023
As U.S. Federal Reserve officials keep telling the markets to expect higher rates for longer, some experts claim that this marks the start of a long-term bear market for assets tied to Treasuries. However, this may not be the case. CNBC’s Squawk Box turned to WE Family Offices CEO and Managing Partner Mel Lagomasino LIVE to find out why she believes a prolonged high-rate environment may offer the best opportunity for fixed-income investments in thirty years.
“If you think about it, from the investors’ perspective, you have a situation where, on the one hand, you have all this great opportunity with the new technologies. While on the other hand, these investors haven’t been paid for their cash at all for the past X amount of years,” says Lagomasino. Meanwhile, as real estate hikes begin to close, she believes these investors will be able to lock in returns as high as 8%.
“This actually gives them more opportunity to invest in the higher risk, new technologies,” Lagomasino explains. “If you think about the portfolio for an investor, it’s not all about one thing. It’s about how you make sure you have the cash flow you need over some period of time. I think fixed income today, and as you go a little further out, they might not just be higher for longer, they might be much higher for longer.”
However, despite mounting opportunities for fixed-income investors, Lagomasino cautions against risky, high-yield bonds. “I remain kind of negative on high yield because I think a recession is definitely coming,” she claims. “I think the cost of capital has gone up significantly and at some point, we will see a recession.”
In addition to debunking fixed income fears, Lagomasino also offers viewers insight into why the “big boogeyman” out there for investors is stagflation, the role the Magnificent Seven should play in portfolios and how the Hollywood strikes may impact profits within the media industry.