A warning indicator has flashed in the bond market and, as investors, we should listen.
A yield curve inversion means that the 2 year bond yield is higher than the 10 year bond yield. Another yield curve, the 5 year bond and 30 year bond also inverted, which is also a significant signal. This publication will explain exactly what this means, why it’s important and what the stock market has done following initial inversion.
Is this a risk to portfolio returns? Yes, it is. Risk, in my opinion, should always be, at the very least, paid attention to despite knowing that the future is unpredictable. Trying to predict an unknowable future is a fools errand and today, I still find myself fully invested in my favorite stocks. However, we should always let history be our guide to future patterns and trends in the stock market. We will focus specifically on past data that history has given us to be a judge of what is coming next.
It may just make a substantial difference in your portfolio.
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