Re: The Saturday Summary Column
Jan 9 wsj Jason Zweig
TIPS fall in yield AND price when inflation low. And vice versa. (I always thought yield and price go in opposite directions for bonds. Not for TIPS I guess).
With inflation projected to be low for forsee able future TIPS have fallen in price and yield. So good opportunity, per Jason Zweig.
Re: The Saturday Summary Column
Today's Zweig column in wsj based on someone's upcoming book on effect of interest rates on stock movements
In last 60 Yrs When Both Discount And Fed Fund Rate Increased Stocks Have underperformed the 10 yr treasury. (0.8 pct vs 1 pct return. This is just ridiculous - hardly any difference)
When one of them increases and other decreases, not sure what article said.
When both decrease, the stocks outperform.
This is just plain junk statistics. Unless one accounts for stock valuations ate the beginning of each phase, how can the stock movement be attributed to interest rate movements.
Plus, when interest rates are lowered, the economy has tanked. Stocks have tanked. So path of least resistance is up. And vice versa when interest rates raised.
To not account for it makes the analysis useless.
The take away - valuations matter.
Asset allocation is the only free lunch.
Periodic rebalancing to keep asset allocation in tact is another only free lunch.
What say you, readers?
Re: The Saturday Summary Column
To be fair, Mr. Zweig does mention as an afterthought that valuations also affect stock movement. But title misleading. He also doesn't state valuations typically low at start of lowering of interest rates. And vice versa.