Down goes the Dow

Title was "Mon oncle d'Amerique".

That seems like a trick question!

Easy answer… bonds over that time period have delivered nearly twice the return of the NASDAQ. Crazy, right?

While I personally we’ve seen peak post-pandemic bond yields (and over the last year of so they’ve been the best we’ve seen since just before the GFC of naught-eight), so that buying opportunities are probably going to disappear soon, if we see rates rise, I’ll be continuing to buy, all the way up. Nearly risk-free income exceeding our planning needs… I surely never expected to see this day, but here we are.

I know this doesn’t make sense to some for whom equities have always been king. But coups happen from time to time. I see prince bond plotting to murder king stock in his sleep. 🙂

I want to hear Sally Vix's take. I was tempted to make Alice Sally Vix instead of DGTD in the meme! I know what your looking at, but remember the BofA Bond Index is weighted by outstanding maturities.

that was a heck of bond bull market.

...

Yes, it was in fact different this time:

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Bob Elliott
@BobEUnlimited
The history of what comes soon after a rapid steepening of the YC following inversion is clear. Recession.
You certainly have to believe ‘this time is different’ if you are long stocks with 25% earnings growth expected over the next 2yrs.

1:13 PM · Oct 21, 2023
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208.8K
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Yeah nah didn't happen

1.7 million views!

The Great Martis
@great_martis
🚨 CRASH ALERT🚨
1987 VS 2024
Im trying to unsee it .
The 1987 crash was biblical
Today we see the same set up
Yields rising /Breach of primary trendline .✅
Measured move complete .✅
Momentum plummeting .✅
Erratic behaviour ✅
The only difference today.
Bigger Bubble

9:09 PM · Apr 25, 2024
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I'm starting to lean in this crazy direction if Trump wins. Forget old bricks and mortar and buy tech. Trump and Vance seem to have a soft spot for tech, and obviously tariffs will hurt US companies that have to buy stuff overseas.

As the third quarter earnings season gains momentum, market participants are closely watching the "Magnificent Seven" companies to see if they can maintain their market-leading performance that has historically driven broader market rallies.
Laffer Tengler Investments CEO & chief investment officer Nancy Tengler joins Catalysts to share her perspective on Big Tech's role in the current market.
"When you look at the reliable earnings growers, these companies check all the boxes. And if you're worried about a slowing economy, I'd much rather own these companies than traditional defensives. I think big technology are the new defensives," Tengler emphasized.

Some selected returns, esp fixed income

1 year

Tech +49%

SP500 +41%

EM debt +38%

EM stocks +28%

non -US stocks +24%

Inter Junk: +17

LT Bonds +17

TLT +15

ST Junk +14

Corp invest grade: +14

Generic bonds +11

Generic overseas +11

Generic inters +11

Inter Tips +9

ST Corps +9

Inter treas +9

ST TIps +7

Generic Short: +7

MINT +6

ST Treas +6

US floating rate +5

3M

SP500: +8%

EM Debt +4.9

Invest Corps: +2.3

Inter generic: +1.8

LT Generic +1.8

ST generic: +1.6

ST Tips +1.6

TLT: +0.8

I suppose the best deal in fixed income is investmetn quality corp bonds. They seem to be doing best eyeballing a risk-reward spectrum.

Kudos to Igy on the EM Debt - he's nailed that one for a long time.

Thanks agip. I am not performing at that level with my EM Bond CEFs, some degradation with stronger dollar and higher 10 Year Treasury. For me up 27% capital appreciation, and 14.34% yield at my cost basis.

Make that I know what you're looking at;

https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

However, Moody's Baa Corporate Bond averages is based on bonds with maturities 20 years and above. The BofA Total Return Index covers all outstanding investment grade corporate bonds and the average maturity is usually half of Moody's.

https://www.researchgate.net/publication/321638521/figure/fig3/AS:569719617196036@1512843149341/Average-maturity-of-US-corporate-bonds-number-of-years-Source-Financial-Times-SIFMA.png

Here's the answer, bonds win, but not by much; $2,432,000 to $2,341,000.

Here's a question for equity bulls; looking at an extended graph, the BofA Index almost appears as a trend line for the NASDAQ, will the NASDAQ trend back towards the Bond Index?

Bad call from Saint Druckenmiller...was worried about the economy right before a big surge in econ growth.

1 year:

Short term treasuries a la Stan: +5%

SP500: +43%

Hard to go too hard on a trade that made money, but bad macro call anyway.

Druckenmiller has been lifted up as one of the old school guys we should listen to. Not on this one!

Carl Quintanilla
@carlquintanilla
(Bloomberg) -- Billionaire investor Stan Druckenmiller said he’s bought “massive” bullish positions in two-year notes, as he’s become more worried about the economy.
In recent weeks, “I started to get really nervous ..”

3:30 PM · Oct 31, 2023
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120.3K
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This guy was talking low returns and the end of the bull market right before that 43% surge.

But to be fair, he wrote about 10 year returns not one year returns.

Jurrien Timmer
@TimmerFidelity
The Cyclically Adjusted Price-to-Earnings Ratio (CAPE) has been predicting lower equity valuations. The secular bull market may have reached its twilight, and we might be headed for single-digit returns during the coming decade. It’s not the end of the world, but it would be a far cry from the double-digit bonanza of the past 14 years.

4:46 PM · Oct 17, 2023
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52.6K
Views

95 years ago today!

the amazing part is that I know people alive today who still feel that day in their bones. Well, really the Depression not the crash. But that period formed millions of habits and worldviews.

If you are in your 90s you were there and knew what it was like. Those people still walk among us. Well, more likely roll among us, but the point stands.

I remember it as if it was just yesterday. (just kidding).

My parents were young children then and it effected them profoundly. Though they are no longer with us, it imparted very deep principals about finances, work ethic, frugality, and I should say, in the case of one of them, to an almost extreme level.

I know that I have some of those traits, and it's apparent where I got them.

That outlook and attitude only make sense in the context of The Great Depression.

So, I would say that it's lessons and impacts exist even today, and I suppose some of my propensities are directly attributable to it, even today.

all time high for NASD today

Yes, it is!

Should be interesting where it goes from here with Alphabet releasing earnings after the close. And not to forget Meta and Microsoft after the bell on Wednesday. Lots to watch...

And speaking of which, nibbled on some more Meta today in advance of some hopefully good earnings/future quarter projections from them.

But that aside, you know, it's all about beating that other indices - the Dow - while we mark time in this "bear market rally".

Thanks for all that gente, all very interesting.

For those following along, I'm not to push bonds on anyone, just outlining how they look like a pretty good buy at this time, and happen to be a very good fit for us, considering our retirement spending plans. I will note, however, that we are probably mostly not wired to think too much of bonds since they haven't been a particularly good investment for the entirety of our investing lives, except for the older folks on the thread who would have started investing toward the middle or end of the high rate environment of the 70s-80s.

Maybe I will make one more suggestion that people try to write out personal investment policy statements. The process of thinking things through can be (in my experience anyway) very useful, and then having the statement can give steady guidance and maybe offer a better chance of avoiding costly kneejerk decisions in the heat of the moment.

it does seem that the 'trump wins' trade is buy big tech hand over fist.

one interesting trade is to buy European stocks the day of the election...they are beaten down on the expectation of tariffs hurting them. But that's in the stock already so if trump wins they shouldn't fall much if at all...but if Harris wins they should bounce nicely on the prospect of no tariffs.