Hi Antagonist members,
I just opened a new Challenge Portfolio trade. Bonds are finally beginning to perform like the safe-haven asset that they have historically been.
When stocks tank, investors often rotate into bonds. On average, bonds don’t return as much as equities, but they also don’t lose as much.
In a normal year, you can earn safe returns with bonds with less volatility and risk than stocks. Last year, however, was an exception of historical proportions. It marked the first time in history that U.S. Treasury bonds performed worse than stocks in a major drawdown (check out my article in DataDrivenInvestor to learn more).
Recently, however, bonds have started to act more like…well…bonds. When stocks dropped earlier this week, treasuries rose. That’s what’s “supposed” to happen.
And that’s why I opened this trade. It hedges our risk if stocks fall and gives us the opportunity to earn a solid profit if bond prices rise.
Here are the details of this latest trade in our Challenge Portfolio:
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