Stocks vs. Bonds

I thought it might be helpful to put the recent equity moves into some BOND context. Here is a RATIO of SPY vs TLT. These are a couple of the most popular ETFs which track large cap stocks as well as long duration fixed income. Hopefully it’s true what they say and a picture is worth a thousand words:

SPY vs TLT relative performance of stocks and bonds
(CLICK HERE to enlarge visual)

This highlights, as John Authers of Bloomberg.com illustrated earlier today, how recent price action is NOT “…yet a correction — of a rally that did not yet need correcting” John goes on

…Stocks have rallied greatly compared to bonds since March, but didn’t threaten the all-time high they registered in October 2018. While stocks have reversed compared to bonds, on this measure, they remain above their 200-day moving average…

NOW for some further BOND CONTEXT. As stocks remain ABOVE their 200dMA (the yellow line above)relative TO bonds, you can clearly see BONDS have been OUTperforming as of late (collapsing down towards 200dMA, yellow line above). BONDS, in other words, DO continue to offer a portfolio some ballast. Whether a 60/40 mix OR something different (45/45/10), is best for YOU, the beauty of bonds remains in the eyes of the beholder. In MY VIEW, BONDS continue to have a place IN a portfolio and what place that IS, should be based on your specific station in life as opposed to what you may see/hear in financial media AND be discussed with your Etico advisor!

Steven J. Feiss

Steven J. Feiss

Managing Director, Fixed Income

Etico Partners, LLC

1795 Rout 9 Clifton Park, NY 12065

Office: (732) 683-9222
Mobile: (914) 450-9668

feiss@bloomberg.net
sfeiss@eticony.com

Meet the Author

Financial markets veteran with more than three decades of experience working with high profile, domestic and international asset managers and trading desks, producing customized and actionable solutions for strategic alpha generation and risk mitigation. Author of a unique daily (6x per week) cross-asset macro market commentary (the BondBeat) to inform and assist INSTITUTIONAL FIXED INCOME investors and trading desks.