Everything in life is relative. In markets, it works the same way.
“How could someone possibly want to own these bonds that pay negative yields”?
Well, what’s the alternative? Crashing stocks? Collapsing energy commodities? It’s all relative.
In my experience, when assets are in strong uptrends, some might call those “bull markets”, they don’t just do well on an absolute basis, but they also tend to outperform their alternatives. In the case of stocks, you have Bonds and Gold that are two other very popular places to allocate capital.
The Chart of the Week has to be the Nasdaq 100 breaking out of a multi-year base relative to US Treasury Bonds (Blue Line). I also included the Nasdaq relative to Gold, which has yet to complete this basing period (Black Line): [Read more…]