The Bond Rally Is Nearing Its End

History tells us this bond fund's rally isn't over yet. But it's not a trend we can expect to last for the long term... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [DailyWealth] The Bond Rally Is Nearing Its End By Brett Eversole --------------------------------------------------------------- If you think stocks have had a volatile few years, that's only half the story. Bonds are supposed to be the boring, slow-moving, consistent part of a portfolio. You own them to balance out the potential risks from erratic swings in stocks. That approach has done a good job of protecting investors over the past few decades... But it has been a train wreck over the past few years. One popular bond fund lost around half its value after peaking in 2020. That's the opposite of what you'd expect when putting money to work in seemingly safe bonds. This fund recently broke out to a new 52-week high for the first time in years. History tells us this rally isn't over yet... But unfortunately, it's not a trend we can expect to last for the long term. --------------------------------------------------------------- Recommended Links: ['A New Surge of Crashes Will Rock the U.S. Stock Market']( The man CNBC's Jim Cramer said he would never bet against just issued a dire warning, including a 90-day threat that's coming for U.S. stocks and how you need to prepare immediately. We recommend you get the facts for yourself – [learn more here](. --------------------------------------------------------------- [How We'll Know the Exact Day This Bull Market Will End]( Porter Stansberry accurately predicted the world's largest mortgage brokers – Fannie Mae and Freddie Mac – were headed toward bankruptcy. He did the same with General Motors in January 2007. Now, he's warning about the No. 1 most dangerous investment in America... and THE one strategy anyone subscribing to financial research should implement immediately. [Stream Porter's market update here](. --------------------------------------------------------------- Bonds tend to be less risky than stocks – but if you buy the wrong bonds at the wrong time, you can still lose your shirt. Long-term government bonds have proved that in recent years. Normally, these government bonds are considered even less risky than most, since most folks assume the U.S. government will never default. Still, when interest rates soar, even government bonds can collapse. And that's exactly what happened when the Federal Reserve began hiking interest rates in the wake of the pandemic. We can see it easily through the iShares 20+ Year Treasury Bond Fund (TLT). This fund holds a basket of long-term government bonds... the kind of bonds that suffer the most when interest rates move higher. As a result of that trend, TLT has collapsed in recent years. Take a look... This fund lost around half its value from the 2020 peak through last year's low. It's the kind of decline that most would have never thought possible a few years ago. We've seen this fund bounce higher recently, though. TLT has been rallying again. And earlier this month, it hit a 52-week high... the first since 2020. To see what that might mean going forward, I looked at every new 52-week high for the fund since our testing begins in 2003. We've seen 11 similar setups over that period. Here's what happened next... It's important to note that these returns exclude dividends. That's why TLT has only increased about 1% a year over the past 21 years. Most of its return comes from dividends... But ignoring them allows us to simply focus on the ups and downs of the fund. With this approach, we can see that buying after new 52-week highs is a smart strategy. But it doesn't offer the kind of linear outperformance we usually see after a breakout. Instead, TLT tends to keep moving higher for about three months. The typical gain was 5.8% over that time frame, absolutely crushing a buy-and-hold strategy. But then, the fun ends... The typical six-month gain was lower, coming in at 3.8%. And the one-year performance was lower still, with gains of just 2.3%. That means TLT tends to keep rising for about three months after hitting a new 52-week high... before it peaks and begins falling once again. That means today isn't a great time to make a long-term bet on bonds. This rally can last a few more months... But it's unlikely to last much longer. Good investing, Brett Eversole Further Reading Gold has staged a massive rally this year. And bullish sentiment for the metal recently reached its highest level since 2022. However, that might be reason to think twice – at least in the short term. Based on history, this excitement could cut both ways... [Read more here](. "Asset allocation is critical," Porter Stansberry writes. The right allocation strategy can potentially make or break your returns. Here are four key principles that can help you create a well-diversified portfolio – and position you to outperform over the long term... [Learn more here](. --------------------------------------------------------------- [Tell us what you think of this content]( [We value our subscribers' feedback. To help us improve your experience, we'd like to ask you a couple brief questions.]( [Click here to rate this e-mail]( You have received this e-mail as part of your subscription to DailyWealth. If you no longer want to receive e-mails from DailyWealth [click here](. Published by Stansberry Research. You're receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. For questions about your account or to speak with customer service, call 888-261-2693 (U.S.) or 443-839-0986 (international) Monday-Friday, 9 a.m.-5 p.m. Eastern time. Or e-mail info@stansberryresearch.com. 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