R.I.P. Bond Bull Market as Charts Say Last Gasps Have Been Taken

One of the biggest questions being pondered by investors now is whether the record rally in U.S. bonds that began in 1981 has reached its end. 

For Louise Yamada, who has been advising clients on how to invest based on what she sees in historical price patterns for almost four decades, the answer is crystal clear. 

“The bull run is definitely over” after 10-year yields pierced 2.5 percent, said Yamada, who heads her namesake technical research firm in New York and is a chartered market technician. “There will be a very slow multi-year incremental increase in interest rates.”

DYI:  DYI has no idea whether the bull market for bonds since 1981 is on going or not.  What DYI does know based upon value and history bond yields are at sub atomic low levels leaving an investor with the obvious problem of far less downside[rates failing] as compared to rates raising.  DYI's averaging formula for long term bonds increases or decreases your allocation depending upon how far percentage wise yields are from their mean. Currently rates are so far from the mean our exposure for long term bonds is at a minuscule 4%.  If rates continue to move upward so will our long term bond allocation; the compounding effect will be enhanced due to higher rates.

12-1-16

BONDS
Updated Monthly

100 - [100 x ( Curr. PI - Avg. PI / 2 ) ]

________________________________

(Avg. PI x 2 - Avg. PI/2)

Avg. Price to Interest PI   22

Current Price to Interest  42

% Allocation  6%  

6% x 60 (max. allocation) = 4%

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION

Active Allocation Bands (excluding cash) 0% to 60%

81% - Cash -Short Term Bond Index - VBIRX

 15% -Gold- Precious Metals & Mining - VGPMX

  4% -Lt. Bonds- Long Term Bond Index - VBLTX

  0% -Stocks- Total Stock Market Index - VTSAX

[See Disclaimer]

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Harnessing market hubris and timidity (greed and fear).

The value player’s most important weapon in achieving superior long term returns is tactical asset allocation.  This is true during secular bear markets when fixed asset allocation, especially those with high percentage of stocks, returns are dismal at best and losses at worst. 

History and math show that when asset prices are below intrinsic value future returns are superior conversely when asset prices are above intrinsic value returns are tepid.

Simply put tactical asset allocation strategy is being more aggressive in undervalued assets and be less invested in over valued assets.

DYI’s formula is an averaging formula answering the question what percentage without emotion.

This blog site is not a registered financial advisor, broker or securities dealer and The Dividend Yield Investor is not responsible for what you do with your money.

This site strives for the highest standards of accuracy; however ERRORS AND OMISSIONS ARE ACCEPTED!

The Dividend Yield Investor is a blog site for entertainment and educational purposes ONLY.

The Dividend Yield Investor shall not be held liable for any loss and/or damages from the information herein.

Use this site at your own risk.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

DYI owes a large amount of gratitude to John Kingham for his averaging formula.