Bondtastrophe

Published: April 8, 2022, 6:54 p.m.

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When it comes to financial markets, many of us have these same particular dates seared into our brains:

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The Great Depression 1929.

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Black Monday, October 19, 1987.

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The Dot-Com Bubble of the late \\u201890\\u2019s.

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The Financial Crisis of 2008.

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These are all memorable dates of when the stock market misbehaved. It wasn\\u2019t the entirety of the financial markets that took a beating during these events, but rather just the stock market.

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In 1929-1932 the stock market returns were such -8.30%, -25.12%, -43.84%, -8.64%. During those same years the US Treasury Bond returns were +4.20%, +4.54%, -2.56%, +8.79%.

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Here are some snips from USA Today on October 20, 1987 (the day after Black Monday):

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\\u201cAs panicked investors scrambled to grab what money they had left, the Dow Jones industrial average spun into a dizzying free fall, losing 508.32 points to close at 1738.41 Monday. The Dow\\u2019s one-day loss of 22.6% destroyed the record set by the 12.8% plunge on Oct. 28, 1929, Black Monday\\u2026

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Yields on 30-year Treasury bonds fell Monday to 9.94%. But the bonds still are a relatively risk-free lure for investors frightened by the risk of stocks. Although the Fed always feels the pressure to keep rates down, West Germany and Japan have raised their interest rates, forcing USA rates up to remain competitive.\\u201d

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Links mentioned in this episode:

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