Total Eclipse of the Sun & the Bond Market

It is a popular misconception that the phenomenon of a total eclipse of the sun is a rare occurrence. Quite the contrary. Approximately once every 18 months (on average) a total solar eclipse is visible from some place on the Earth’s surface.  That is two totalities for every three years.

So what does that have to do with the Bond Market you ask? 

The yield on the benchmark 30-year US Treasury bond briefly dipped below 2.5%. In other words, it is cheaper to borrow money for 30 years than for just a few months – a phenomenon known as an inverted yield curve.  The inversion between the three month and 30-year rates has only happened six times in the last 39 years; five of those times it preceded a significant pullback for stocks (as reported by Tavi Costa, a global macro analyst with Crescat Capital). The Federal Reserve plans to discuss lowering short term rates ahead of their next meeting (July 31st)  which could “correct”, at least temporally, the current inversion

Before you start logging onto your investment accounts to run to cash, please take a moment to focus on not only your long term goals but also why you own what you own. Markets have been generally headed upwards for over ten years now and investors have been rewarded and in many cases have not really “experienced” a lot of “risk” ……….as their balances keep growing (what risk??).

So as you think about your own accounts and the accounts of clients you serve, take a moment to not only review what you have but review why you own what you own. Ask the important questions and KerberRose Wealth Management is here to help you.      

KerberRose Wealth Management we believe we have very good partners in Schwab and Morningstar. In addition to our partnerships, we take the extra step to review our investment decisions by utilizing a system called Scorecard. The Scorecard System methodology incorporates both quantitative and qualitative factors in evaluating fund managers and their investment strategies on nine unique factors and 5 Risk Buckets.  

All this, of course, does not guarantee investment success but it should give you a better understanding of the risks you are facing. Although a total eclipse happens on average every 18 months, if you stood in one place and waited to see one, you could end up waiting 300 years or more.

If you are interested in completing a Scorecard with KerberRose, please contact Daniel Wotruba at (920) 434-7310 or email Daniel.wotruba@kerberrose.com. KerberRose, Your Trusted Advisor.