Central Banks Branching Out Into Equities

Posted by D4L | Thursday, November 08, 2012 | | 0 comments »

Here’s a news flash that’s a bit old, but staggering in its implications: Central banks — entities charged with providing quick access to a nation’s hard assets to back up its currency — are increasingly dabbling in stocks because bond yields are ridiculously low. So are dividend stocks actually a lower-risk investment, on the whole, than bonds? Some central bankers seem to think so, judging by their actions.

After all, these are institutions that act out of capital preservation to back up their national currencies, not investment banks looking to make billions in profits through active trading. It’s pretty telling when “national reserves” are in fact investments in blue-chip stocks. According to previous reports, Israel took a stake in (what else!) Apple (NASDAQ:AAPL) as well as equity index trackers that presumably are heavy where the S&P 500 and the Dow Jones Industrial Average are weighted — mega-caps Exxon (NYSE:XOM), General Electric (NYSE:GE), IBM (NYSE:IBM) and AT&T (NYSE:T), for example.

Source: InvestorPlace

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