Commentary
You Choose: Potentially Get Paid to Wait or Get Punched in the Face
September 15, 2023
Bond yields continue to rise and surprise market participants. Early buyers of long-term bonds have experienced steep losses. Short-term yields continue to be well above long-term yields. Our equity market algorithm is equally applicable to the bond market. It reinforces our position to keep our bonds short. However, as we explore in this month’s note, the time to make a change may be approaching.
Investors Float On
August 4, 2023
Investors can once again get solid returns in short-term US Treasuries. But, for now, they do not seem to care. As long as stocks continue to rise, investors favor with the stock market. When the market turns, we expect investors to appreciate the new opportunity in front of them and sour on the stock market. When will that happen? We do not know, but luckily, we can just consult our algorithm.
Robust Errors
June 15, 2023
How can we have useful models that forecast performance a decade from now, but tell you nothing about the short or intermediate term? We believe that the journey you have already partially completed informs the remainder of the trip. After overshooting over the past half-decade, investors should expect to give back some of their recent S&P 500 gains in the years to come.
A Smoother Ride
May 3, 2023
As the markets continue to adjust, investors face the historically anomalous situation where US Treasury Bills and the stock market offer approximately the same expected returns, in our estimation. We do not expect the situation to last long. Until it does, investors would be wise to replace some of their normal stock market exposure with US T-bills.