Bond Market’s April Fool’s Joke
Two years ago on the 1st of April, the ten-year U.S. government bond yielded less than two-year U.S. government bonds, commonly known in the investing world as a 2/10 inversion. This has historically been a reliable signal of an upcoming recession, predicting every recession since 1976.
Two years later, markets have had large gains, with no recession in sight.
You might notice in our past writings that we do not solely rely on rules of thumbs (even when they are widely-accepted) when it comes to investing; it can be dangerous and costly as markets always have an ability to surprise you.
2022 serves as an example, it was the year of the recession that never came.
Global stocks have since added an additional +32.22% of returns to investors in the following year, up to the end of March 2024.
Whilst there are pockets of weakness in certain geographies, most economists would agree that the current economic data does not support a global slowdown at this point in time. However, we know that a recession will occur some time in the future.
For most investors, navigating markets can be a daunting task. Unable to get a sense of what happens next. Selling out in an attempt to time the top of markets is as damaging as selling down too late in a bear market. Legendary fund manager of the famed Magellan Fund, Peter lynch, has a quote that perfectly encapsulates this below.
Not only can it be stressful for investors to manage their money this way, it is unlikely to be effective.
If you would like to know how we help investors to sleep easy knowing that we have robust daily processes that keeps risk in check such that we conserve capital during periods of heightened risk, click here to schedule a chat with us.
Most of us would trust an accomplished physician to manage our health. After all, physicians have specialised training, real-world experience, and access to tools outside the reach of the general public. Most importantly, they took an oath to prioritise the patient’s health over their own interests.
In the same fashion, GYC espouses the same expertise in markets as good physicians do with health care. Additionally, we adapt insights from financial science to develop a financial plan that is built upon a rigorously tested investment philosophy.
Experience the difference today with an interest aligned wealth manager.