Today’s Chart of the Day comes from S&P Dow Jones Indices.
One of the first investment lessons my father taught me was that when stocks go down, bonds go up, and vice versa.
This relationship, measured by a positive correlation measured in the chart, has held for a long time; however, this year the relationship broke down and has headed into negative territory.
The laws of finance are not broken, and the relationship is still there; however, it is being masked by increased inflation which hurts the prices of stocks and bonds.
P.S. I still remember Black Monday in 1987. At the age of 13, the 100 shares of stock I owned, bought from mowing lawns, went down to pennies. I bought another 1,000 shares for $100 with the dream of getting rich when the market came back. However, that company eventually went out of business. I still have the stock certificate and the “should have been diversified” lesson with me today.
Samuel serves as Senior Vice President, Chief Investment Officer for the Crews family of banks. He manages the individual investment holdings of his clients, including individuals, families, foundations, and institutions throughout the State of Florida. Samuel has been involved in banking since 1996 and has more than 20 years experience working in wealth management.
Investments are not a deposit or other obligation of, or guaranteed by, the bank, are not FDIC insured, not insured by any federal government agency, and are subject to investment risks, including possible loss of principal.