Wednesday, June 8, 2011

Reversion Idea: Buy Bonds Buy Stock for Convergence

Bonds are lagging - they are flat this month while the S&P is down 4%. I would expect the bonds to jump to catch up.

You could buy bonds and buy stock and wait for them to converge. Or, just buy more bonds as a Texas hedge.
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5 comments:

  1. Stagflationary MarkJune 8, 2011 at 8:18 PM

    Speaking of reversion to the mean. I've given that some thought today as it relates to gold.

    Gold Prophets

    I can say with 100% conviction that I prefer to own an acre of toilet paper than a 0.2 ounce gold coin.

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  2. CPJune 8, 2011 at 8:33 PM

    As you know, I am not crazy about gold, but I would be long gold and short Euros.

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  3. CPJune 8, 2011 at 8:33 PM

    Also, I like being long gold and short silver.

    I think there is a bigger speculative element in silver than gold.

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  4. Stagflationary MarkJune 8, 2011 at 10:53 PM

    CP,

    I think there is a bigger speculative element in silver than gold.

    I agree.

    Silver is like leveraged gold to me, just like it was in the 1970s.

    That's pretty much what we've seen in GLD vs. SLV. They move together but the movements in silver get amplified.

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  5. EconomicDisconnectJune 9, 2011 at 3:28 PM

    I may agree an acre of TP beats 0.2 ounces of gold!

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