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Hi D1,

Regarding bond yields,
Could you please explain it then? I am asking nicely. I am quite mathematically adept, so don't worry about that.

You've displayed math and finance savvy sufficiently enough, I have no worries of your ability to understand financials.

I just need to know the concept of what the graph is illustrating (if its not really bond price), and a quick summary of how that would turn into yield.

The graph is illustrating the market's RELATIVE periodic valuations through time. You don't have to worry about what the metrics on the Y-axis represent... money units (euro, mark, dollars, etc) or points, or ticks, or anything else. That is all the realm of the Fundies who tend to ignore the objective realities of the markets, and focus on the drama.

Different markets use different metrics on the Y-axis... but the X-axis is the standard (time) that is universal. (OK, the exception being point-and-figure charts... which is a whole different world and process.)

The long bond charts fairly perfectly mirror the naked 30 FRM rate charts... so you can easily see that what defines the Y-axis is irrelative.

You've already illustrated your ability to properly analyze market historical trends simply by visual observation. You already "understand" at last 50% of what it takes to analyze market behaviours.


Funny, cause I've read studies that say that the correlation between the last change and the new change borders on irrelevant, basically 50%.
Here's one such study I just found:
http://www.financialplanauditors.com/ruminations/DoMarketsTrend.pdf
It says that a positive year in the market is followed by another positive one 74% of the time. But that a negative year is followed by a positive one 70% of the time. There is no statistically meaningful difference there.


You've chosen a study analyzing the probability of a single-progression, with no relevance at all to the historical trend itself (which you have now displayed an understanding of.)

If you are completely blind to the history earlier than yesterday, then tomorrow's results will always be close to a 50% probability of today's results. There's simply not enough known to tell otherwise.

(This probably explains why some participants in this thread are so dischuffed; Market Myopia.)

I have found several more summaries of studies that conclude the same thing, but they do not provide hard numbers - and typically require pay or purchase of a book to see more.
Anyway, you claim the studies justifying trends are all around, so provide a few.


A very wise lurker to this thread emailed me offline & said; "Dave... are you REALLY having that much fun trying to open the eyes of the blind & have them change their religion?" (He said it... not me.)

He may have a point.

I COULD bother digging up the cites for what I am explaining, and it would doubtlessly consume a decent amount of time... but I know it's there. The question is what benefits will I be providing you? (The busy-work of the research won't add anything to MY day.)

To answer this question, I would ismply ask you, D1, this;
Have you learned anything from this thread, that I have brought to you, that you did not know and accept before?

If so, what?

The answer will tell me whether I am getting any traction in my contributions.
(I hope for the best.)

And finally, I note that despite the "trend", bankrate says mortgage rates are up 3 beeps in the last week. Anecdotal I realize, but there ya have it.

If you'll click "whole thread" and review myposts, you'll read that I have referred to an uptick in the last 3 days several times. Today it is cancelled out by a dropping of rates again.

Cheers,
Dave Donhoff
Strategic Equity & Mortgage Planner
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