October 25th saw the first-ever TIPS sold with a negative yield
Monday, October 25th, was an historical day for the
Hulbert, who edits The Hulbert Financial Digest newsletter, goes on to detail how investors who purchased this security could benefit in both an inflationary and deflationary environment. If investors see high inflation of, say, 5 percent over the next five years, the TIPS sold on Monday will have an average yield of 4.45 percent. (The TIPS were issued with a five-year maturity.) Compare that with today's dismal treasury yields. On the other hand, if the Consumer Price Index declines by 2 percent over the next five years, the investor would get a real return over the next five years of 1.45 percent annually, according to Hulbert. With all the uncertainty in the markets right now, he sees it as a win-win situation for investors.
MarketWatch: Heads I win, tails I win too
Inflation concerns are growing as many investors are predicting that the Federal Reserve will initiate another round of quantitative easing at its rate announcement meeting next week. PIMCO's chief executive,
Democrats and Republicans may both have something to celebrate after the midterm elections: A stock market rally. From 1922 to 2006, the average gain of the Dow Jones Industrial Average over the 90 trading days following midterms (roughly November until mid-March) was 8.5 percent, according to a new study authored by
It's rare to find a trend this consistent, Gendreau says. The Dow has risen following 19 of the last 22 midterm elections. He attributes the Dow's rise in the past to a number of different factors, but mainly the idea that with a greater balance of power between the
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