Markets: a brave new world

Posted: September 19, 2016 in Uncategorized

September 2016 is looking a most interesting month.

I always thought the best managers are the one that understand when the market changes.

It was quite a while that the FED talks about rising interest rates, but in September really acted on it.

The yields back up strongly provoking quite massive losses on US  Treasury Bonds (as when yields are so low any move as a price magnification effect.

Now we are entering in an “increasing rate environment” were a lot of positions that proved profitable in the last decade will not work anymore.

At this moment there will be plenty opportunities to escape the massacre as we will “yield back up tantrums” followed by relief rallies as the Reserve Banks will sooth the markets.

But the overall direction of the market and what “works” and “does not works” changed and you, or your adviser, better understand this.

A “rising interest rate” market is much harder for everyone – you can still make money and there are different phases to it – but never yields have been so low – so the usual parameters do not work.

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