Wall Street can easily be split up into different types of investors.
Mutual fund investors are looking for a hands-off retirement savings. General stock traders are looking for a steady investment income without too much risk. Options traders are looking for homeruns with leverage, and are willing to take on a bit more risk. And bond investors are often what are referred to as the ‘smart money’ of the stock market.
And these sophisticated bond investors are often ahead of everyone else, so let’s take a look at what they’re telling us – it could be the hint you need to make thousands once the next market event occurs…
If you’ve been following along to the Wall Street Informer commentary we’ve been providing, you know that we’ve been preparing to make big money from the next market cycle – a bear market.
And although many people who want to believe a climbing market can last forever have pointed to this past month’s upswing as evidence of just that, this market action is something Wall Street Informer experts have been expecting.
But it never hurts to get the backing of an outside source, which is why now is the perfect time to get the perspective of the sophisticated bond market.
Let’s see what it’s telling us…
The clearest evidence that we’ve already entered a brand new bear market is the fact that Treasury Bonds are in a long-term bull market!
Feel free to see for yourself by looking into the iShares 20+ Year Treasury Bond ETF (TLT).
For those who don’t know, Treasury Bonds and stocks are generally the inverse of one another. Although it doesn’t always play out this way, let Investopeida quickly explain why:
“Bonds and stocks compete for investment money at a fundamental level, which suggests that a strengthening equity market would attract funds away from bonds. This would tend to lower the demand for bonds; sellers would have to lower prices to attract buyers. Theoretically, the price of bonds would gravitate south until bond yields rose to a level that was competitive with the risk-adjusted returns found in the stock market.”
So when the “smart money” is flocking to bonds, it’s discernable that the sophisticated investor sees a falloff for stocks in the relatively near future.
This is just another piece of evidence telling us that we need to be prepared not only to protect ourselves from a fall in stocks, but also to get ready to profit from that event finally taking place.
All you have to do is follow our lead…
