We thought we had it all figured out before this week started.
We were wrong.
The top minds in the investment business offered some novel analysis, broke conventional wisdom, and even opened our eyes to some misperceptions.
This particular week, we learned cheap stocks aren't always cheap, top experts have Reinhart and Rogoff all wrong, the bond market may be in a bubble, and that the biggest bond funds are almost guaranteed to underperform this year.
What follows are excerpts from such stories this week. All of the important stuff you might've missed this week is right here.
The relationship between stock and Treasuries broke down
"...What you can see is that the stock market has grown considerably more optimistic, pricing in growth, and perhaps some inflation. Yields on the other hand indicate a massive, ongoing bid for Treasuries, suggesting fear and skepticism about growth..."
Most bond fund managers will 'take a knee' in 2012
"...Earlier in the call, Gundlach noted that nearly 95% of active bond fund managers underperformed the Barclays aggregate bond index in 2011. "You basically can't do that again [in 2012] without putting your whole business at risk," said Gundlach.
This fear of underperforming the benchmark again is spurring the widespread shift toward indexing strategies. Gundlach described it as "taking a knee" in 2012..."
The age of consumer deleveraging is over
"The latest Consumer Credit data was just posted to the St. Louis Federal reserve, and we instantly noticed this. For the first time since the recession, the year-over-year change in revolving consumer credit (credit cards) is 0%..."
See the rest of the story at Business Insider
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See Also:
- Chicago Fed Chief Calls For 'Substantial' Monetary Easing
- GARY SHILLING: 2012 Is Going To Be Totally Crappy
- EMERGING MARKETS: This Is What Will Happen In 2012