Jan

28

It is interesting to compare the runup in stock prices and decline in bond prices to that which precipitated the Oct 19, 1987 catastrophic decline in stocks and increase in bond prices with the present whenever there is a 15 percentage point divergence in favor of stocks in the ratio of stocks to bonds such as in the last month.

A commenter writes:

Revisiting history: In 1987, bond yields were around 7ish % and over the course of the year, they rose through 10%. before the "crash". In 1987, fed funds rose from 6% to 7.5ish%. Before the crash.In 1987, the S&P rose from 240ish to 330ish (37%) in an impulse move, without any correction. Before the crash.In 1987, the S&P p/e ratio rose from 16ish to 24ish. Before the crash. (Are we at 16 yet?)In 1987, inflation was rising and real yields were rocketing higher.Source: all bloomberg data. Disclosure: I sure ain't bullish. But I do own SPX calls because the trend is my friend.


Comments

Name

Email

Website

Speak your mind

Archives

Resources & Links

Search