Author: Smead Capital Management

Any avid climber must be deeply anxious while watching the movie, Everest, a true story based on a 1996 expedition to the summit of Mount Everest. This gripping story, from a memoir called Left for Dead: My Journey Home from Everest, follows a climbing team whose journey turned disastrous from dealing with the naturally volatile conditions on Mount Everest.

As we have mentioned in our recent pieces, investors are very conscious of the seen risks (especially exogenous risks) in the investment markets. Under the assumption that the seen risks are accurate and well known, let’s look at a few of the unseen risks in the stock and bond markets over the next two to three years which could frustrate investors.

Marketwatch.com writer, Ellie Ismailidou, wrote an interesting article on July 5, 2016 proposing that the drop in the U.S. 10-year Treasury Bond Yield below 1.4% represents an “insatiable demand for safety.” As contrarians, we love these kinds of well-written thoughts as the media makes folks more and more aware of what has worked in the stock and bond markets this year. We thought it would be helpful to put today’s circumstances into a historical context and look at clues for the best possible behavior for investors in the past and in the future.