Bonds Pitched As Alternative To Wild Stocks
Are the giddy heights, and recent volatility, of stock prices making you a bit woozy? You're not the only one.</br></br>This week alone, two financial-services giants, Merrill Lynch and Vanguard Group, urged customers in separate mailings to consider bonds as a less-volatile alternative to stocks.</br></br>The recommendations by Merrill and mutual-fund firm Vanguard appear to reflect widespread concern about the potential for a stock-market downturn that could follow a big increase in stock holdings by households and mutual funds held mainly by individual investors.</br></br>Merrill noted that the share of financial assets in stocks held by individuals rose from 28% at the end of 1990 to 54% at the end of 1997. In contrast, Merrill said, the share for bonds shrank to 19% from 26% in the same period.</br></br>And in a newsletter customers received this week, Vanguard's fixed-income chief, Ian MacKinnon, noted that bonds' returns are historically less volatile than those of stocks.