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TLT - Nowhere To Go But Lower (Long-Term Bond Yields Higher)

Published Wed, 12 Jun 2019 09:00:00 -0400 on Seeking Alpha

Sanford C. Bernstein & Company Analysts (January 2017)
“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria”
Sir John Templeton
“Life and investing are long ballgames.”
Julian Robertson
I have been bearish on bonds since 2016, expecting higher long-term bond yields, and after a promising start in 2016, this has been a difficult trade, as the lower for longer narrative has continued to gain traction, remarkably almost 40 years into the current bond bull market, and even with the S&P 500 Index, as measured by the SPDR S&P 500 ETF (SPY), up over 275% over the past decade.
During this time frame, meaning the past ten years, the iShares 20+Year Treasury Bond ETF (TLT) has actually risen a little over 100%, a somewhat surprising development considering the elevated level of bond prices following the Great Financial Crisis that spanned 2007-2009.
Bond prices and stock prices are rising together, in my opinion, because the U.S. stock market has become more yield-oriented than ever, so lower bond yields help a current dominant driver of the stock market, where many investors - institutional and retail - are focused on dividend yield, as they have been pushed out of the risk curve ever since central banks brought short-term policy rates to near zero levels.
Adding to the narrative, we cannot forget that the large-cap technology stocks like Amazon (AMZN), Facebook (FB), Alphabet... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
APPLE 197.87   16.6 11.89 3.08 1.59
SPDR S&P 500 ETF 293.06   0.0 0.00 3.99 1.38
AMAZON.COM 1908.79   79.7 23.95 0.00 0.00
NETFLIX 363.52   129.8 2.80 0.00 0.00


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