Prudential Financial Inc (PRU), Wells Fargo & Co (WFC): Stocks to Buy Now Before the Bond Market Crashes

Under normal circumstances, brokers make money through management fees on sweep accounts and more profitable investments for brokerage-account cash credit. But with short-term rates so low, Charles Schwab Corp (NYSE:SCHW), E TRADE Financial Corporation (NASDAQ:ETFC), and other companies have had to subsidize their money market funds, accepting lower management fees in order to avoid having investors’ returns fall below zero. A renewal of higher short-term rates will return things to normal and provide a nice boost for Schwab and its money-managing peers.

Be prepared

It’s important to remember that interest rates have made upward moves like this in the past without following through into a full-blown bond market crash. Moreover, most analysts remain comfortable in the belief that the Federal Reserve won’t allow the negative experience of 1994, when the bond market suffered a similar abrupt upward-rate shock, to repeat itself.

Most people agree, though, that sooner or later, bond rates need to rise. Before that happens, it’s important to find stocks to buy now that will produce the results you want later on, helping you not only avoid losses but also reap profitable opportunities from the resulting bond-market carnage.

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The article Stocks to Buy Now Before the Bond Market Crashes originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Wells Fargo.

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