Day: April 2, 2019

My career started in 1994, which was a stealth bear market for stocks and an outright bear market for bonds. Fed Chair Alan Greenspan hiked rates seven times as he played catch up in response to a percolating economy that rediscovered its sea legs coming off the 1991 recession. The Federal Funds Rate doubled from 3.00% to 6.00%, and the 30-year bond yield jumped 150 basis points to 7.75%. You lost roughly 25% by owning the long bond, and although the S&P 500 grew operating earnings 18% that year, its price declined around 1.5% while your average stock did far worse. This Fed era was quite opaque, often surprising the market and offering very little read-through. At times it seemed Greenspan reveled in non-transparency, as the opening quote reminds us.