Loading ...Times, that are changing…
Most retirement fund managers and generally wall street, they are used to invest 60-40 or somewhere there around, where they have 60% allocated in stocks equities and 40% in bonds, since when stocks go down, bonds helps to offset, they tend to move in opposite directions.
Well, lately not so much. What will all these fund managers do, if this continue, when both asset classes are moving down? Where will money go? To energy and real, tangible assets?
Extend those charts to two years, and its even more pronounced.
TLT since FJB came into office is now down ~50% (170 to 85)
That’s the bloodbath and that’s why regional banks have such enormous “unrealized losses” from T bond holdings they never hedged.
Yes, correct, this is going on for about last two years.
Fun times, we are living in…
There is a very interesting correlation to 1987 and this correlated move. Only, the culminating capitulation of stocks on black monday marked a massive reversal in treasuries. I wonder if we are careening towards the same situation. The coming disconnect could be quite spectacular!
Sir Buck (I hope your name implies a beautiful deer, not the USD buck) …
The fund managers are still saying, at 4.6% or thereabouts the interest rates will make a (temporary?) high and everyone shall pile in into treasuries, for isn’t that a beautiful return?
I don’t think the fund managers themselves believe what they are saying.
When macro changes … beliefs need to change. And that’s the hardest thing.
With all due respect to the honest hard working fund managers (I’m sure there must be some honest ones, who really did care about their clients’ portfolios) … it is not easy for them right now.
I believe at their heart, they must be thinking “can I advise my clients to stay in cash? Then what good are my services? Or, worst yet … the killer of all fund managers … PMs? ”
Just a reminder of my favorite line … what I read years ago and love to read everyday.
“The crisis takes a much longer time coming than you think,” said the late MIT economist Rudiger Dornbusch, “and then it happens much faster than you would have thought.”
GL