SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Pastimes : Clown-Free Zone... sorry, no clowns allowed
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Les H who wrote (170267)6/4/2002 11:40:38 PM
From: Les H  Read Replies (1) of 436258
 
U.S. Quantitative Strategy: Hanging in the Balance

Joseph Mezrich

The performance spread between U.S. equities and U.S. bonds so far this year has been 600 basis points. The negative correlation we are seeing between stocks and bonds is quite rare. It has occurred only three times in the past 75 years: in the 1930s, the 1950s, and now. This negative bond-stock correlation is associated with a low-inflation, low-growth environment that can persist for years. This is also what took place in Japan in the 1990s. The message we draw from the markets is that interest rate hikes are probably not warranted, and that investors need to be very good asset allocators to do well when correlations are so low and mistakes are costly. A way to hedge the risks is to balance your portfolio between stocks and bonds. For equity-only investors, the analog is to balance your portfolio between growth and value, since when bonds do well, value does well, and vice versa. As for the earnings outlook, the earnings-to-GDP ratio is near a 30-year low, having troughed in March. Historically, it takes about a year for the stock market to come back after a trough in this ratio, so by that measure, we would not expect to see a real market turnaround until the first quarter of 2003.

morganstanley.com
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News