Stocks and bonds continued to struggle, with bonds (TLT) hitting 11-year lows. In short, anyone holding 20+ year treasury bonds just had more than ten years of investing wiped out from the high back in 2020.
The highly touted safe, low-risk income generating investment of long-term treasury bonds is down over 47% from the high.
This is the worst selloff ever for treasury bonds that I can see on the charts. Because the Fed kept such low-interest rates for an extended period, inflation spiked, and now they are trying to catch up by raising rates.
Simply put, rising interest rates affect bond prices. When rates go up, bonds come down. The recent move in bonds clearly shows the risk involved in owning them. It is like picking up 2-5 pennies in front of a steamroller. The reward of a couple of percent vs. having your investment crushed nearly 50% seems like a high-risk position to hold in a retirement portfolio.
You may say, well, hindsight is 20/20, yes, for sure, but if you follow the price charts as I do, you could have exited bonds the day they topped in March 2020 for a massive gain and would have avoided this collapse we are still experiencing entirely. This is what investors and I did using ETF investor newsletter signals. The good news is that some relief could be just a few days away!
The only other time bonds sold off remotely close to what we are experiencing now was the 2007-2010 bond selloff of 29%.
I Don’t Want To Look At My Retirement Account
I keep having phone calls with individual investors who still own and hold bonds, and I can tell they are getting close to the breaking point in which they can’t handle the pain of seeing more losses week after week in their retirement accounts.
People are telling me they are scared to look at their investments because it is so painful. All I can say to help is that bonds (TLT) are set up for a seasonal rally that could help support prices as we head into the end of the year. Also, the chart analysis from a short-term trader perspective shows signs that bonds are about to bounce in a few days to help support this seasonal bias.
End Of Year Santa Clause Rally For Stocks
October is also a time when stocks put in a bottom and kick off the holiday rally. In fact, this week, I have been showing my followers how the market internals and sentiment are shifting for stocks and that a big move is about to take place.
It is still a coin toss as to the direction, but there is a great deal of energy building, and whichever way the price starts to move next, it could be significant, 10-15%, in a couple of weeks.
The seasonality chart and market sentiment are both pointing to higher prices, which is what I would like to see as well. So I plan to buy the hottest sector ETFs once we get a new confirmed buy signal, and gold or silver miners could be one of these sectors.
Warning: Gold and silver stocks may be the next hottest sector for an end-of-year rally, and then I expect some extreme price moves for gold.
Trends And What To Expect Next
With the price of bonds being oversold and ready for a bounce during the low seasonal month, it could help stabilize your portfolio from falling.
Also, if stocks start their holiday rally, this will help drive your account value higher and provide temporary relief. However, and I don’t want to say this, but I will because you should know it.
Both stocks and bonds are in bear markets. This means the odds are any bounce or rally will be sold into, and then prices will continue declining, which could last well into mid-2023. To see what I mean, take a look at my Oct 4th bond chart forecast and outcome. In comparison, the holiday rally may last many weeks, but it’s likely to stall and keep going lower in 2023.
My stock market trend and trade signal chart paints a very clear picture of what you should do with your portfolio. When the stock market trend is red, you should be sitting in cash or owning an asset that is rising in value. This year the hottest asset has been UUP, the US Dollar Index. Those who are more aggressive traders tend to trade inverse ETFs or put options on the sell signals.
Concluding Thoughts
In short, without going off too much on a rant, you can read the three lies we are told by financial professionals that IRK me. Because of these lies, you, the individual investor, must work harder, work longer and experience painful financial situations – EXACTLY what you are going through right now, which could have been avoided.
LIE #1: Diversify, Diversify, Diversify
LIE #2: Bonds Are Good And Safe Investment And Should Represent A Large Portion Of An Investors Portfolio
LIE #3: Speak With An investment Broker Or Advisor Before Placing An Trade To Be Sure It Is Suitable For Your Circumstances.
I think we all know how well all those have worked out.
My passion is trading and investing, having been at it for over 25 years. My goal is to help as many investors and entrepreneurs not only preserve their capital but be able to grow their wealth with my proprietary ETF investing strategy that only holds assets rising in value.
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Chris Vermeulen
Chief Investment Officer
www.TheTechnicalTraders.com
Disclaimer: This email and any information contained herein should not be considered investment advice. Technical Traders Ltd. and its staff are not registered investment advisors. Under no circumstances should any content from websites, articles, videos, seminars, books or emails from Technical Traders Ltd. or its affiliates be used or interpreted as a recommendation to buy or sell any security or commodity contract. Our advice is not tailored to the needs of any subscriber so talk with your investment advisor before making trading decisions. Invest at your own risk. I may or may not have positions in any security mentioned at any time and maybe buy sell or hold said security at any time.
