It turns out that when you compare the performance of bonds with the direction of
inflation during bear markets, the relationship strengthens.
It turns out that when you compare the performance of bonds with the direction of
inflation during bear markets, the relationship strengthens.
Not exact matches
During the
bear market beginning in 1973, the
inflation rate increased by more than 9 percentage points — from 3.4 percent to 12.4 percent.
The best framework for bonds protecting portfolio capital
during equity
bear markets is: average to above - average starting bond yields, with an average to above - average rate of
inflation — which is set to decline in a recession - induced
bear market.
During bear markets beginning in 1980, 2000, and 2007 — the ones in which bond exposure was most helpful — the rate of
inflation declined.
Implied
inflation (the difference between 10 - year nominal and 10 - year real yields) fell nearly 100 basis points
during the 2000 - 2002
bear market.
The level of
inflation volatility is still low, relative to the peaks reached
during prior secular
bear markets.
You can see the aftermath in the next set of graphs, which show the same interaction of
market valuation and the volatility of
inflation, but in this case
during the three secular
bear markets of last century, and the secular
bear market beginning in 2000.
Because multiples were low and
inflation measures were flattening out, there was no signal prior to the nearly 30 percent decline
during the summer of 1982, which marked the end of a 17 - year secular
bear market.
With the C Fund you won't run the risk of your money being eroded by
inflation the only considerable risk you are taking is having your money invested
during bear market cycles.
Earnings Growth Forecasts May Require a Robust Economic Recovery Secular
Bear Markets and the Volatility of
Inflation Trading Volume Separates Bull
Markets from
Bear Rallies A Stock
Market Rebound Closely Linked with Economic Data Surprises
Market Valuations
During U.S. Recessions Stock
Market Valuations Following the Great Moderation Will Global
Markets Take Their Lead from the U.S.?
During the
bear market beginning in 1973, the
inflation rate increased by more than 9 percentage points — from 3.4 percent to 12.4 percent.
The change in the rate of
inflation is one of the determining factors in how well bonds protect balanced portfolios
during equity
bear markets.
The best framework for bonds protecting portfolio capital
during equity
bear markets is: average to above - average starting bond yields, with an average to above - average rate of
inflation — which is set to decline in a recession - induced
bear market.
As you can see, adjusting corporate earnings for
inflation clearly solved the problem of soaring earnings
during this
bear market.