In which situation would a savings bond be the best investment to earn interest?

Question: In which situation would a savings bond be the best investment to earn interest?

Answer:

A savings bond would be the best investment to earn interest during moments of market high tones. The document notes that the presence of market hysteria usually means hyperbolic optimism and overpriced securities are signs that point towards diverting people’s investments to bonds. He added that this strategy is consistent with contrarian trading and assists in preserving capital during times of uncertainty. For instance, the document describes the dot-com boom in the latter half of the 1990s; investors incurred massive profits to subsequently become overconfident. Unfortunately, the market downfall in the year 2000 led to a massive loss of investors who did not diversify or switch to safer securities such as bonds. If an investor buys savings bonds during such phases of high optimism, he can protect his principal accrue relatively steady income from the bonds and miss the downside of the heated-up markets. This strategy also operates on mass psychology, because most of the investors are optimistic during market highs. Thus, by moving to savings bonds at this time, investors are going against the general trend in a contrarian manner, which as has been pointed out, of late has helped some preserve wealth in the event of a correction or crash. Also, this approach can be viewed as a reflection of the ancient knowledge of such great trading gurus as Jesse Livermore, who underlined the significance of patience, time, and discipline in trading, investing, and waiting for the right time to enter the market.