When the hurdle rate rises, companies are going to have to show cash flow. Still, there are some silly investments attracting investors. Bernstein cited a Bloomberg article on a new hedge fund raising money to invest in the junior debt of Icelandic fisheries. Apparently, the S&P 500 and the senior debt of Icelandic fisheries are too risky.
But it's the bond market where investors might get truly crushed. Bernstein's own fixed-income portfolios have a duration equal to a meager 32 percent of the benchmark. Enough said.