The risk-reward trade-off in bonds relative to stocks has rarely been so alluring
“Markets tend to return to the mean over time.” A simple rule by investing legend Bob Farrell, but elegant. Interest rates may move in Nikolai Kondratieff long-term waves, and we may well be in a secular bear market, but there are also short-term cycles within that longer-term trend where profitable opportunities emerge. I sense we are at one of those short-term turning points, at the very least.the end of the tightening phase each and every time.
The same holds true for the equity risk premium, which is fast approaching zero for the first time since 2002 — another period to have been overweight bonds and underweight equities in the asset mix. A Bob Farrell-like mean reversion here would imply, as a base case, the S&P 500 correcting further, to around 3,200 or 3,300, and a coincident adjustment lower in the 10-year Treasury note yield to a band of 2.5 per cent- to three per cent.
I should add that the last time the net speculative short position was anywhere close to being this extreme was back in September 2018 and over the following 12 months, the detested 10-year Treasury note yield plunged from three per cent to 1.8 per cent, and that in turn generated a very nice 14 per cent total return 12 months hence.
Shakedown or smart business? Quebec restaurants balk at hefty penalty for using competitor's payment machines
France Dernières Nouvelles, France Actualités
Similar News:Vous pouvez également lire des articles d'actualité similaires à celui-ci que nous avons collectés auprès d'autres sources d'information.
David Rosenberg: This one sector is looking like a buy in an overall shaky stock marketThere is a strong bull case for having Aerospace & Defense exposure at time of heightened risks throughout the world
Lire la suite »
Five stock themes for bargain hunters. Plus, the one sector David Rosenberg thinks is a buyA roundup of investment ideas for active investors
Lire la suite »
Premier David Eby blindsided by Trudeau's announcement on carbon tax changesPremier David Eby is left stunned and angry after Prime Minister Justin Trudeau announces changes to the carbon tax, exempting home heating fuels in rural areas for the next three years. British Columbia is now out-of-step with the national carbon tax framework, leaving rural homeowners on oil furnaces to pay significantly more.
Lire la suite »
Rob Shaw: David Eby needs to realize Justin Trudeau doesn't want to be friendsB.C. finds itself out of step with the country on the carbon tax all of a sudden
Lire la suite »
Rob Shaw: David Eby needs to realize Justin Trudeau doesn't want to be friendsB.C. finds itself out of step with the country on the carbon tax all of a sudden
Lire la suite »
'Fight Club' Director David Fincher Doesn't Get Its Far-Right Fan Base EitherKelby Vera is a Senior Reporter for HuffPost's Trends team and is based in Los Angeles. Her work has appeared in Hollywood Life, Vice, Paper, and DailyMail.com, focusing on entertainment, pop culture, and U.S. politics.
Lire la suite »