The Most Crowded Trade – The Duration Crisis:

The Most Crowded Trade – The Duration Crisis:

  • The light blue line shows the correlation between value stocks and the US Long Bond
  • The navy blue line shows the correlation between growth stocks and the US Long Bond
  • Until recently, both VALUE & GROWTH have historically carried very similar correlations to the performance of the long bond
  • As documented in our papers herehere and here, many growth stocks today are highly speculative and the public is “all in” 
  • These growth stocks now rise when bonds rise at a time when bonds are as expensive as any time in 40 years

Kailash believes investor crowding into growth stocks and yield-less bonds is creating a “duration crisis.”  Our paper next week explains the problem and launches a sophisticated tool generating duration statistics for equities.

Important to note:  Kailash believes this is one of the most significant papers and tools we have launched in our decade+ of research.  If you would like to review the work and preview the tool upon release please click here.

 

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Kailash Capital and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.