Talk Your Book: Cash Was Easy… Now What?

“People have gotten comfortable in a rising rate environment, investing like that is going to last much longer than it might.” That observation from Brandon Clark, ETF Business Director at Federated Hermes, captures the central tension in income investing today. With over $3 trillion sitting in money market funds and long-dated bonds offering yields not seen in decades, investors are frozen—afraid to move out of cash, yet potentially missing the opportunity to lock in higher rates and capture price appreciation if the economy softens. Clark joined Michael Batnick and Ben Carlson on Animal Spirits to unpack how advisors and clients are navigating this moment, the role of options-based ETFs in generating income, and why behavioral finance is as important as portfolio construction.

The Cash Trap: Why Investors Won’t Leave Short-Term Yields

The Wall Street Journal recently highlighted a paradox: individual investors are piling into money markets despite bond yields that would have seemed extraordinary just a few years ago. The 10-year Treasury is at 4.7%, the 30-year at 5.3%. Yet many investors refuse to extend duration. Clark attributes this to “PTSD from 2022,” when the 60/40 portfolio suffered simultaneous losses in stocks and bonds as the Fed hiked rates from zero to 5%. Investors now fear that buying longer-term bonds will lock in losses if rates rise further.