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#BreakingNews It’s the Worst Bond Market Since 1842. That’s the Good News

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Published: 19 May 2022 19 May 2022
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The four-decade-long bull market in bonds is over, but that doesn’t mean you should dump them.

How much more of a beating can bond investors take?

So far in 2022, with inflation raging, bonds have lost 10%—among the worst returns in U.S. history. On Wednesday, the Federal Reserve raised interest rates by 0.5 percentage point, the sharpest increase in 22 years.

Yet, just as your body begins healing from an injury before you can feel any improvement, the worst for bond investors might already be ending. Those who dump bonds now might be making a mistake by selling low after buying high.

Let’s start by putting the pain in historical perspective. 

The U.S. bond market has had positive returns, before inflation, in all but four years since 1976. Even in 1994, when the Federal Reserve raised interest rates six times for a total of 2.5 percentage points, bonds lost only 3% in the aggregate.

Almost never has the U.S. bond market lost as much money as in the first four months of 2022, according to Edward McQuarrie, an emeritus professor of business at Santa Clara University who studies asset returns over the centuries.

Long-term Treasury bonds lost more than 18% this year through April 30. That surpasses the previous record, a loss of 17% in the 12 months ending in March 1980, says Mr. McQuarrie. The broad bond market has performed worse so far in 2022, he says, than in any complete year since 1792 except one. That was all the way back in 1842, when a deep depression approached rock-bottom.

It’s worth noting that, adjusted for inflation, at least nine past periods have been worse, says Bryan Taylor, chief economist at Global Financial Data, a research firm in San Juan Capistrano, Calif.

Inflation is like kryptonite for bonds, whose interest payments are fixed and thus can’t grow to keep pace with rises in the cost of living. Until recently, inflation seemed like a problem of the distant past, when it often plagued bond investors.

For most of the four decades since 1981, interest rates have been falling and bond prices rising, creating a tailwind of capital gains for fixed-income investors. You not only earned interest on your bonds but pocketed extra profit as they went up in value.

Over some long periods, such as the 20 years ending in March 2020, bonds earned even higher returns than stocks, without any of their bloodcurdling losses.

Those glory years are gone.

“I think the long downtrend in interest rates has finally come to an end,” says Mr. Taylor. “People have been wrong about the direction of rates for 40 years, but I have to think that at this point they might finally be right.”

Read full article here: https://www.wsj.com/articles/its-the-worst-bond-market-since-1842-thats-the-good-news-11651849380

 

#BreakingNews #Checkout #Cryptocurrency #Digitalcash - USD (^DASHUSD) $55.6873 -1.4659 (-2.56%) Way Oversold Vs. Bitcoin BTCDASH?

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Published: 19 May 2022 19 May 2022
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Readers, take a look at the Cryptocurrency Dash

Digitalcash - USD (^DASHUSD)

$55.8206 -1.3326 (-2.33%) 

Looks way over sold vs. Bitcoin 
52-Week Range $45.2475 - $284.6804
Way down from $285ish to $55ish!

https://www.dash.org/

 

#BreakingNow #DowJonedIndustrialAverage off -1,067.53 Points (-3.27%)! Is this 1929 All over Again?

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Published: 18 May 2022 18 May 2022
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Readers, the Dow Jones Industrial Average is tanking, with 
no bottom in sight! Is this chart above playing out, or is this a short 
term dip? What do you think?

Below is a link to the DIA ETF...Technical
Opinion rating is a -100% Sell with a Strongest short term outlook 
on maintaining the current direction.


https://www.barchart.com/etfs-funds/quotes/DIA/overview


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Published: 18 May 2022 18 May 2022
Hits: 125 125
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