Bonds Have Bear Markets Too

Bonds Have Bear Markets Too

Posted on September 04, 2018
9/4/18
 
Market State 1- Bullish (5 days): The current market environment remains positive but is getting extended. A short-term correction could be coming soon.
 
Canterbury Volatility Index (CVI 46): Volatility remains low and decreasing.  This is a bullish characteristic.  Canterbury will continue to monitor CVI as it approaches extreme low conditions.
 
Market Comment
The S&P 500 and most major U.S. market indexes had a strong week. The S&P 500 was up 0.9%, and the Dow was up 0.7%. Most bonds and International stocks continue to struggle. The Treasury Bond ETF (TLT) was down -0.014% for the week and is down -4.47% year-to-date.
 
Conservative investors who believe that adding bonds to their portfolio’s will always make it safer, are learning that all traded securities will have bearish periods. Bonds have been in a bearish-Market State since the beginning of the year. Many international indexes are also down.  The EAFE index (Large Cap International stocks) are down -4.3% year-to-date, while the Emerging Market ETF (EEM) was down -2.22% over just two days (Thursday and Friday) and is down a whopping -10.2% year-to-date.
 
The Canterbury Portfolio Thermostat, an adaptive portfolio, has the ability to own inverse funds.  For example, while bonds and emerging markets are going down, the Portfolio Thermostat can rotate to inverse of these positions like 7-10 year treasuries and emerging markets. Inverse securities go up when the underlying index goes down.
 
Bottom Line
At Canterbury, we specialize in Adaptive Portfolio Strategy.  Every asset class, whether equities, alternatives, or bonds, will go through both Bull and Bear markets.  This is why having a systematic process, like the Canterbury Portfolio Thermostat, is crucial to risk management.  The Thermostat uses a unique process to identify and allocate across various asset classes to create an efficient portfolio, regardless of the macro market environment. 

Recently, we produced a video detailing the advancements in technology as well as the Portfolio Thermostat and adaptive portfolio strategy.  The link can be found here:
https://youtu.be/hQBY_UmZymc
  
Canterbury Investment Management: Tom Hardin

More About Tom Hardin
As Chief Investment Officer, Tom has more than 30 years of experience in the investment management industry and has a broad breadth of knowledge. He is known as an innovator, educator and has been revolutionary in the advancements of portfolio and risk management.


Every effort was used to provide accurate data and mathematical calculations to provide, what we believe to be, accurate results. Canterbury Investment Management, LLC, and its principal owners, make no guarantee of completeness or accuracy of data or calculations as well as conclusions of any statistical data or information contained in the simulation illustrated on this page. Past results or performance is in no way a guarantee of future results.