As measured by the ratio between HYG (Junk Bonds) and TLT (US Government Bonds, 20 Year).
HYG is now outperforming TLT by 14% from the extreme level as that seen in late 2008.
Clearly the fears have outweighed the evidence for this disproportionate pricing of junk bonds.
Back in 2008 we had financial firms closing their doors, Lehman, AIG, Bear Stearns, Banks were going under, the Gov't was taking over the banking system and spending 1Trillion to get the economy going again. Housing prices were plunging and home loans couldn't be made. Banks weren't making loans. Unemployment was surging to 10%+...
And yet, compare that to 2015... nothing could be further from those events.
Smooth sailing ahead!? Never. Fears relived are just as real as the first time.
Tim
3/11/2016 11:25AM EST
Comment
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Upside potential 10% in the next 3 months - 6 months.
Risk: 4%-5%.
Comments
A-shot
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Is it still working?
A-shot
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But how do you see this translate to the markets given that the price action is right after the the market collapse but now we are in the opposite side of the stick at all time highs?
timwest
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@2use, Panic at all time highs is what we still have here. Tons of cash. Tons of shorts. Yet high margin balances. Bearish sentiment the highest in decades (10-month average)... An election year "trash-talking" all year long hurt sentiment. Either way, look for values in sectors and stocks, not in the "market".
A-shot
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@timwest, Value investing in sectors, this sounds like pre-crash investment approach. "Tons of cash. Tons of shorts. " it feels so, but then the market is being brought to all time highs - by who? I can't see an average investor do this, and for the ton of shorts, it must be painful - i wonder if this will indeed trigger an euphoria or "chasing" seeing that the market is going up. Large scale bull trap?
UnknownUnicorn380940
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it seems more like bars in two thousand and seven..if it is the case, we have 6-13 months to wait for go long on gold like crazies
mr.cable
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I just want to ask you what you think about dow jones for next 3 months
with best regards
timwest
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Sideways is my forecast for the year 2016. I was bullish at the lows in January-February looking for a rebound to around this level and just see a see-saw market from here. Search my charts - especially my "FORECAST FOR 2016"
Wxal
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Tim are commodities turning or is this an oversold bounce or bear market . Thanks.
timwest
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@Wxal, I wish I saw your question 8 months ago. Commodities in general are moving on their own merits and not as a group.