Brace For A Potential Recession Through QQQ And IEF

Summary

  • When recession comes, you better own treasury bonds rather than stocks.
  • Interest rate cuts are historically not a good sign for the stock market because they coincide with the actual start of a recession.
  • I bet that ERP will rise again, and that is only possible if either bond yields fall, earnings yields rise, or stocks fall.
  • Bond yields have already started to fall - IEF is likely to outperform the broader stock market in case of a recession.
  • So my recommendation is 5x long in IEF and 1x short in QQQ, based on the thesis that we're facing at least a mild recession that is not yet priced.
  • Looking for more investing ideas like this one? Get them exclusively at Beyond the Wall Investing. Learn More »

Recession Warning Green Road Sign Over Dramatic Clouds and Sky.

Feverpitched

When recession comes, you better own treasury bonds rather than stocks

On November 27, 2022, I published an article titled "How To Position Your Portfolio For 2023" in which I analyzed current events in the market

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This article was written by

12.81K Followers
Daniel Sereda is chief investment analyst at a family office whose investments span continents and diverse asset classes. This requires him to navigate through a plethora of information on a daily basis. His expertise is in filtering this wealth of data to extract the most critical ideas. He runs the investing group Beyond the Wall Investing in which he provides access to the same information that institutional market participants prioritize in their analysis. Learn more.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Short position through short-selling of the stock, or purchase of put options or similar derivatives in QQQ over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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