Listen to What Stock Market Expert Trader Stanley Druckenmiller Has to Say About It…
So many investors in the stock market today have only ever known the steady bull market from early 2009 until 2021. For them, they idea that a simple buy-and-hold S&P 500 index strategy will deliver healthy double digit returns, year-in year-out ,is (was) pretty much internalised gospel.
Brave New World…
Well, the world is changing fast in 2022. The U.S. 2-Year Treasury just hit 4.2% yield today, the highest in 15 years! The 10-Year yield has crept up to 3.7%. At some point the reward/risk profile of U.S. Treasuries is going to compare rather well to the medium-term prospects for U.S. equities. If (when) that occurs, we predict there will be a lot of money leaving the stock market.
So when we came across this article today, we thought it important to share it with you, our Members and prospective Members. The author and Druckenmiller point out that rising interest rates and taxes are going to reduce US corporate earnings. Their conclusion?
“As a result, investors are likely going to have to do more than just passively buy and hold a broad stock market index if they want to avoid a prolonged period of negative real returns.”
Enter the beauty of stock pair trading, a.k.a. long/short equity trading.
Bear Market, Bull Market, Sideways Market? Doesn’t matter with pairs trading.
The strategy tends to deliver consistent returns in most market conditions.
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Here is the article. Definitely food for investment thought:
Authored by Jesse Felder via TheFelderReport.com
Legendary hedge fund manager Stan Druckenmiller, in an interview with Palantir CEO Alex Karp, recently gave a pretty bleak assessment of the stock market in the years ahead.
This may leave some wondering what specifically makes Stan so bearish today. Well, as the Fed recently warned, the windfall in corporate profits driven by both interest rates and corporate tax rates falling to the floor is a phenomenon that simply won’t be repeated.
And in the context of equity valuations that have come to discount that phenomenon continuing indefinitely into the future, that’s a real problem.
As a result, investors are likely going to have to do more than just passively buy and hold a broad stock market index if they want to avoid a prolonged period of negative real returns.
