The junk bond market is pricing in more pain / risk / growth deceleration while U.S. stocks are sanguine. Stocks behind the ball as usual?
The Most Misleading Chart in Finance?
I’ve recently seen an old chart making the rounds again. This is a chart many advisors bring out when markets start getting choppy. Advisors use this chart to prevent their clients from selling stocks when volatility picks up and clients start getting nervous (like this past October for example).
While I agree that emotional investors tend to make very poor decisions that end up costing them a lot of money, the chart commonly used to try and make that point is one of the most misleading charts in all of finance. I’m embarrassed to say I also used to show it.
Without further adieu, I present the most misleading chart in finance…
Unemployment, Consumer Confidence and Recessions
I’m seeing some widespread misconceptions about the relationship of unemployment rate and consumer confidence to recessions. Below is a chart that sheds light on this historical relationship followed by a few brief comments.
Continue reading “Unemployment, Consumer Confidence and Recessions”
2-, 10- and 30-Year Treasury Rates Over Time
Bond and Stock Behavior Throughout History
I think it’s important for investors to understand the historical behavior of the investments they hold in their portfolios. This understanding helps investors maintain realistic expectations of their investments going forward (both good and bad), invest more appropriately, and remain disciplined through up and down years. “Remaining disciplined” means not chasing returns in good years while not fleeing your strategy in bad years. Continue reading “Bond and Stock Behavior Throughout History”