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CHART OF THE DAY: INVESTING BASED ON THE YIELD CURVE

5 March 2010 by Cullen Roche 3 Comments

Today’s Chart (or table) of the day comes to us via Mebane Faber at World Beta.  He put together an excellent table showing the annualized average monthly by asset class as they pertain to the steepness of the yield curve.  The study dates back to 1973.  The results are interesting to say the least:

Source: World Beta

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Comments
  • chris

    thanks! the steep (and recently steepening) yield curve is what i am most focused on. it would be nice to see how the financial subset of the S&P has done, although i can tell your that for the past 6 months, it has been doing very well.

    now you are getting your mojo on, mr tpc!

    03/05/2010 at 12:32 PM
  • Clueless

    Interesting chart. Does this mean that bond investors are more informed than equity investors and that the latter takes their clues from the former or the other way around? Personally my money is on Bill Gross.

    To Chris: Good point, but I think that it would be unwise to try and draw conclusions from the current financial sector recovery. It is after all coming back from “cardiac arrest”. However, borrowing short and lending long associated with a steep yield curve works well, so we should be in a sweet spot for banks.

    03/06/2010 at 1:28 AM
  • Van

    interesting, but I wish he had gone back to Ibottson’s or Shiller’s stat dates…

    03/07/2010 at 8:48 AM