Do Treasuries have leprosy? Or are they just not sexy enough? You do want to own equities to build long-term wealth that I agree with 100%. Thing is - nobody ever asks me how the Treasury market performs the year after the Fed moves to the sidelines after a tightening cycle. The fundamental lows in the S&P 500 are simply not in despite this year’s rally, and we had three terrific rallies like this in the 2007-09 bear market that were fun to rent but not to own. Play the market to the highs but make sure you have hedges and insurance in place. Yes, true, but in cycles when the Fed tightens enough to generate an inverted yield curve we have ended up with a recession and bear market with a lag 100% of the time in the past. The stock market lows happen 2-3 years after the Fed moves to the sidelines… think of what happened in 1990, 2001, and 2008. I get reams of Wall Street research sent to me about how terrific the S&P 500 does three, six and twelve months after the Fed presses the pause button. All I get are questions every day that sound like this: “How do equities perform after the Fed pauses?” Day in and day out. Today’s investor class is truly a bizarre bunch. Interested in receiving more complimentary macro insights like this? Request a free trial of Rosenberg Research's services by clicking here.
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