Carnegie Market Blog

 

The Positive Correlation of Rates and Stocks, Uber, and Rising Death Rates.

Posted by Brent Luce on Dec 9, 2016 1:06:50 PM

Interest Rates and Stocks are Positively Correlated

Contrary to the theory we all learned in ECON 101 about the relationship between interest rates and stock prices, (watch this video for a simple overview of the theory), the longer-term correlation between stocks and interest rates has been POSITIVE for almost 20 years.  Take a look at the chart I created below.  In this chart, the top shows the S&P 500 against 10-year U.S. Treasury rates, the bottom shows the trailing 20-quarter correlation between the two.  Interestingly, there was a clear change in 1998, when stocks and interest-rates began to move more in tandem.  I would love to hear theories from the readers as to why this change occurred.   Here are a few related thoughts and observations:

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Topics: Stocks, Interest Rates, Uber, Death Rates

Driverless Ubers and Whether Passive Investing is Worse than Marxism

Posted by Brent Luce on Aug 26, 2016 3:16:23 PM

 The Proliferation of Indices

The chart below shows the growth in the number of indices over time.  Just over the past couple of years, this measure has exploded.  Why is this happening?  In the past few years, there has been a push toward passive investing versus active investing. Investors are being sold on this idea by companies who provide so called “passive” investment strategies like ETFs. These ETF providers are always looking for more products to sell and, as a result, work with indexing companies to create new indices on which to base their ETFs.  Now, there are over 5,000 indices – more than the number of stocks in the Russell 3000.  RELATED:  Passive Investing is Worse than Marxism.

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Topics: Autonomous Cars, Passive Investing, Index Proliferation, Uber

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