Ordinary Investors Now Have an Advantage Over the Pros

Pigs still can’t fly and hell hasn’t frozen over, but interest rates have gone negative, and that’s weird enough. In early March, about a quarter of the debt issued by euro zone governments traded with negative yields. On March 9, six-month Germany Treasury bills—Unverzinsliche Schatzanweisungen—were auctioned to yield an annual rate of –0.22 percent. This means that if you buy a German bill and hold it to maturity, you won’t get all your money back. And Germany is having no trouble finding investors willing to accept those terms.

Keep those Unverzinsliche Schatzanweisungen in mind as you look for ways to make money. Whether it’s oil futures or oil paintings, each investment opportunity competes with other investment opportunities. When the German government gets away with paying negative interest, it’s a sign that investors don’t think they have better options. If they did, they would be putting their money into them. After a long, strong rally in the major world markets, it’s time to lower your expectations for growth.