Friday, February 8, 2013


I think 2012 was one of those years that made you just say, "What the heck?".  Examine the following chart of TBF (short 20 year treasuries) and SPX in the background.

The "normal" relationship between stocks and bonds suggest that when the bond price falls (yields rise) and stock indices will actually increase as you assume that money flows out of bonds (sending prices lower) and into stocks (chasing prices higher).

In the graph below, which includes TBF (the short version of treasuries)  we see that in 2010 and 2011, these two charts moved in tandem, just as expected.  Suddenly, in 2012, the relationship turned on its head and did just the opposite.  In 2013, we have a resumption of the old co-movement.

TBF and SPX -

What could have caused this divergence from the normal relationship?  What caused it to come back into alignment?


Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at