value investing congress - slide multiple 8 20120502 investing congress omaha, nebraska the end of...
TRANSCRIPT
Value Investing Congress Omaha, Nebraska
The End of the Bond Bull Market
(From an Equity Investor’s Perspective)
“Chains of habit are too light to be felt until they are too heavy to be broken.”
- Warren Buffett
“A trend is a trend is a trend but the question is will it bend? Will it alter it’s course through some
unforeseen force and come to a premature end?”
- Sir Alec Cairncross
Doug Kass
President
Seabreeze Partners Management May 7, 2012
A SUPERIOR ASSET CLASS - 40 YEARS OF BOND MARKET OUTPERFORMANCE
ON BEING A CONTRARIAN – PITFALLS AND REWARDS
WHAT HISTORY TEACHES US -BEWARE OF PROFESSORS, THE MEDIA AND
INVESTORS WHO EXTRAPOLATE!
KEY FACTORS THAT COULD BE DISRUPTIVE TO THE BOND MARKET
1. THE FLIGHT TO SAFETY PREMIUM ERODES
2. A MUDDLE THROUGH ECONOMY MIGHT GAIN SPEED IN THE YEARS AHEAD AS DOMESTIC
GROWTH MOVES TOWARD POTENTIAL
3. FEDERAL RESERVE POLICY IS LIKELY ON HOLD – NATURAL PRICE DISCOVERY IN FIXED INCOME
4. INFLATION ON THE ASCENT
5. HOUSING IS EMBARKING ON A DURABLE MULTI-YEAR RECOVERY
6. STOCKS VERSUS BONDS – THE APPROACHING REALLOCATION TRADE
7. U.S.FISCAL IMBALANCES ARE NOT BEING ADDRESSED
1974 – 2011 Yearly Total Return
for Long Term US Bond
Source: Dan Greenhaus, BTIG
2011 Yearly Total Return
for Long Term US Bond
2011 Yearly Total Return
Nominal GDP vs. Bond Yields
10 Year Bond Yield 30 Year Bond Yield Nominal GDP YOY Yield
___________________________________________________________________________________________________________________
10- 10-Year Treasury yield
approximates year-over-year
% change of nominal GDP
Growth
Source: Omega Advisors
The Foundation for
a Multi
Housing Recovery
is Solid Source: James Paulsen, Wells Capital Managment
The Foundation for
a Multi-Year
Housing Recovery
is Solid
James Paulsen, Wells Capital Managment