6494 S Quebec St • Centennial, CO 80111
303-785-3838

The Shaking of the Rattlesnake’s Tail?

The Shaking of the Rattlesnake’s Tail?

For years, analysts have been predicting the collapse of the 30 year bond rally. Since 1982, bond prices have generally be rising at a rate without near-term historical precedent. In early 2009, it was widely thought that it was the end of the bond price rally as Treasury rates were pushed to historical lows (yields and prices go in opposite directions).

As it turned out, those who sold out of bonds would have missed out on another three more years of growth – especially in 2011. For what it’s worth, the “selling out of bonds” early crowd would have been in good company with some of the most famous and reputable bond experts of all history.

As it turned out, late 2008 was not going to hold the record for long for low bond yields and the record would be broken again in the autumn of 2011. The key thing to keep in mind is what bond analysts are looking at when they say this and why they were wrong and most importantly that people can be only temporarily wrong. At each of these points in history bonds were at their lowest yields in history and generally that means that at certain point they can only go up. 2011 was unique when the yield on the 10 year Treasury fell below the average dividend yield of the S&P 500; to my knowledge this has never happened. Historically, mathematically, financially, etc. this does not make rational sense. However, anyone who has been a human for any length of time knows that in this world things can stay irrational longer than anyone can imagine and investors will still keep buying overpriced investments long into this irrational phase. In 1996 Greenspan famously gave a speech about the irrational exuberance over internet stocks. For three years Greenspan was wrong and then, in March of 2000 he suddenly became woefully right when the dot com bubble popped.

In the past few weeks, bond prices have been falling sharply and one can’t help but wonder if this is not the shaking of the rattlesnake’s tail for a possible collapse in bond prices?

My opinion is that bonds are generally overpriced (particularly treasury bonds), but that the investor’s risk level with bonds has a lot to do with what kinds of bonds they buy. Some types of bonds are so overpriced that investors should get out of them or be prepared for a bumpy ride – certainly in the past few weeks these bonds have shown this vulnerability. On the other hand, other types of bonds show a lot of opportunity and have not gotten as much attention from the general investing public. Investors can still diversify the volatility with bonds, but should be careful about which bonds they choose.

The moral of the story is that if you are in an asset class (such as bonds) that is historically selling for prices well above what would be consider “normal”, and we go through a few weeks where you see those prices drop, it’s probably a good idea to change roads or at least check the pressure in your tires because it’s going to be a bumpy ride once reality hits the proverbial fan.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Investing in securities, including stocks and bonds, is subject to market fluctuation and possible loss of principle. No strategy can assure success or protect against loss.

 

23 Responses

  1. I like the efforts you have put in this, thank you for all the great content.

  2. Very interesting details you have noted, appreciate it for putting up.

  3. cbd oil says:

    I needed to draft you one little bit of observation so as to say thank you once again for those great methods you’ve documented here. It is quite pretty generous of people like you to deliver freely exactly what a number of people could possibly have made available as an e book to end up making some cash for themselves, even more so given that you could possibly have done it if you ever decided. These ideas also served to become good way to realize that some people have the identical keenness really like my personal own to realize much more when it comes to this matter. I believe there are several more pleasant sessions up front for people who scan your site.

  4. Thanks for your whole work on this website. My niece takes pleasure in working on research and it is simple to grasp why. We all notice all relating to the powerful ways you render vital tricks via your website and therefore welcome response from website visitors on this topic while our own simple princess is without question understanding so much. Take pleasure in the rest of the year. Your performing a wonderful job.

  5. hemp oil says:

    I needed to post you that little bit of observation to say thanks once again for your magnificent pointers you’ve featured in this article. It is quite remarkably generous of people like you to give openly just what a number of us might have marketed as an e book to end up making some dough for themselves, most notably given that you could possibly have done it if you ever decided. These pointers as well served like the fantastic way to fully grasp other people have similar eagerness similar to my very own to see somewhat more with reference to this problem. I know there are some more pleasurable situations up front for people who see your website.

  6. buy cbd oil says:

    Needed to send you the very little word to finally thank you so much the moment again regarding the spectacular techniques you have shared on this site. This has been simply surprisingly open-handed with you to present unreservedly what most of us would’ve sold for an electronic book in order to make some bucks for their own end, certainly considering that you could have done it if you considered necessary. The concepts additionally acted as the easy way to be certain that many people have a similar dream just as mine to find out a great deal more concerning this condition. Certainly there are a lot more enjoyable instances ahead for folks who discover your blog.

  7. I needed to draft you one little bit of observation so as to say thank you once again for those great methods you’ve documented here. It is quite pretty generous of people like you to deliver freely exactly what a number of people could possibly have made available as an e book to end up making some cash for themselves, even more so given that you could possibly have done it if you ever decided. These ideas also served like the fantastic way to comprehend other individuals have similar eagerness like my own to know good deal more on the subject of this issue. I’m sure there are many more fun occasions in the future for individuals who look into your blog post.

  8. cheap viagra says:

    I intended to create you a little note just to give thanks as before for all the exceptional guidelines you’ve discussed at this time. It has been certainly incredibly generous of people like you to allow extensively all that a lot of folks could have distributed as an e-book in order to make some bucks for their own end, chiefly considering the fact that you could have done it if you considered necessary. The creative ideas additionally acted as the easy way to be certain that most people have a similar dream just like mine to find out a little more in regard to this condition. I’m certain there are lots of more enjoyable moments ahead for individuals that examine your blog.

  9. I wanted to put you the tiny remark to be able to say thanks a lot over again on the precious strategies you have provided in this case. It was really strangely open-handed with you to make publicly precisely what many people would’ve offered for an ebook to get some money for themselves, notably now that you might have tried it in case you wanted. Those techniques likewise worked to become a great way to recognize that someone else have the same passion similar to my very own to see somewhat more with regard to this problem. I know there are some more pleasurable situations up front for people who see your website.

  10. propecia buy says:

    Thank you for your entire labor on this web site. My mom take interest in participating in investigations and it is obvious why. My partner and i learn all regarding the lively tactic you produce simple thoughts through your web site and in addition invigorate response from the others on the subject then our favorite princess is truly studying a whole lot. Take advantage of the rest of the year. You have been doing a superb job.

  11. endep cost says:

    Thank you for each of your hard work on this web page. My aunt really likes going through investigations and it’s really obvious why. Most of us learn all of the lively method you offer practical strategies through this web site and even increase participation from some other people on the issue so our favorite girl is in fact learning a lot of things. Take advantage of the rest of the year. You are always doing a really good job.

  12. I am commenting to let you know of the fantastic encounter my cousin’s daughter experienced reading your site. She even learned many issues, not to mention what it’s like to have a wonderful giving mindset to have many people quite simply grasp chosen grueling subject areas. You really exceeded our expectations. Many thanks for giving the informative, healthy, educational and as well as easy thoughts on the topic to Jane.

  13. I precisely had to appreciate you all over again. I am not sure what I would’ve taken care of without these suggestions revealed by you over that subject. It was an absolute intimidating problem in my position, nevertheless taking a look at this specialized style you resolved the issue took me to leap with happiness. I will be happy for your service and then sincerely hope you realize what an amazing job you have been providing teaching some other people using your webblog. Most likely you haven’t got to know any of us.

  14. paxil no rx says:

    I’m commenting to let you be aware of of the awesome discovery my child developed browsing the blog. She came to find a good number of details, including how it is like to have a great coaching character to get a number of people clearly completely grasp a number of advanced issues. You actually did more than her desires. I appreciate you for churning out such effective, dependable, edifying and cool guidance on that topic to Emily.

  15. I simply wanted to thank you so much once more. I do not know what I would’ve taken care of without these suggestions revealed by you over that subject. It was an absolute intimidating problem in my position, nevertheless taking a look at this specialized style you resolved the issue took me to leap with happiness. I will be happy for your service and then sincerely hope you realize what an amazing job you have been providing teaching some other people using your webblog. Most likely you haven’t got to know any of us.

  16. My husband and i felt absolutely ecstatic Edward could complete his homework from the ideas he discovered from your very own site. It’s not at all simplistic just to be giving away helpful tips that men and women could have been making money from. And we discover we have the blog owner to appreciate because of that. Most of the explanations you’ve made, the easy blog menu, the friendships you assist to engender – it’s everything excellent, and it’s assisting our son and our family do think that content is brilliant, and that’s extraordinarily fundamental. Many thanks for all the pieces!

  17. My spouse and i have been really joyous that Jordan managed to finish off his research through your precious recommendations he had through the web pages. It is now and again perplexing to just find yourself handing out solutions which people today may have been selling. Therefore we know we need the writer to give thanks to for that. The most important illustrations you have made, the simple web site navigation, the relationships you will help to instill – it’s got most powerful, and it’s really leading our son in addition to the family reason why the situation is fun, which is really pressing. Thank you for the whole lot!

  18. Thank you for every one of your hard work on this web page. My aunt really likes making time for investigations and it’s really obvious why. Most of us learn all of the lively mode you offer precious suggestions through this web site and even increase participation from some other people on the matter so our favorite girl is now learning a lot of things. Take advantage of the rest of the year. You are always doing a really great job.

  19. I am only writing to make you understand what a really good experience my wife’s princess obtained viewing your webblog. She noticed some things, which included what it is like to possess an ideal teaching spirit to make others with no trouble learn about specific tortuous things. You undoubtedly surpassed readers’ expected results. Thanks for providing those productive, trusted, informative as well as unique tips on your topic to Mary.

  20. I happen to be writing to make you understand what a useful experience our princess went through visiting yuor web blog. She realized too many things, with the inclusion of what it is like to possess an incredible teaching style to make the others without hassle thoroughly grasp various very confusing topics. You undoubtedly surpassed visitors’ expected results. Thanks for showing those warm and friendly, trustworthy, revealing not to mention unique tips on your topic to Tanya.

  21. My husband and i ended up being cheerful Albert could carry out his analysis because of the ideas he acquired from your blog. It’s not at all simplistic just to always be freely giving concepts a number of people could have been making money from. And now we acknowledge we’ve got the blog owner to appreciate because of that. All of the explanations you’ve made, the easy blog menu, the friendships you aid to create – it’s all amazing, and it’s aiding our son and our family believe that that article is amusing, and that’s especially essential. Many thanks for all!

  22. I simply wished to thank you very much yet again. I do not know what I would have used without those tips and hints shown by you relating to this topic. This has been the traumatic setting in my view, nevertheless viewing your well-written way you treated the issue took me to weep with joy. Now i am thankful for your work as well as wish you recognize what an amazing job your are undertaking training the rest with the aid of your website. Probably you haven’t met any of us.

  23. I am glad for writing to make you know what a magnificent encounter my friend’s girl gained studying your web site. She learned plenty of pieces, which include what it’s like to possess an awesome helping nature to let other folks very easily know just exactly several multifaceted subject matter. You truly exceeded people’s expectations. Thank you for presenting these powerful, safe, explanatory and in addition fun tips about this topic to Julie.

Leave a Reply

Your email address will not be published.