Short Term Trading Member Forum

[techcharter]

Deva, that's it in a nutshell.

Popular media and conventional wisdom favor the inverse relationship between stocks and bonds to the point that they believe it to be a law of nature. I created charts of the bond market (A and B bonds) from Fed Reserve yield data for the Great Depression when BOTH stocks and bonds fell. Even with this very real FACT, the general population chooses to dismiss it as an anomoly. Same thing goes for South American markets of the present. The general population wants to believe in the inverse relationship that any blatant contradiction is rationalized away. The best conclusion is the markets are anything but rational.

Lightly put, when both stocks and bonds fall, it represents a contraction in credit. Or even a major loss in confidence.