Quantcast
Are you getting the best rate from your broker?
Compare your broker's rates now to find out if you can save money

Choose your broker below
Welcome to Dividend.com. Please help us personalize your experience.

Select the one that best describes you
ALERT

Packaging Materials Best Dividend Stock Makes Boring Profitable

Dividend logo

Like oil and water, bonds and stocks are often at odds with each other. One goes up, while the other goes down. And that dynamic is why we use them together in a portfolio to create diversification and generate overall better risk-adjusted returns.

Or at least that’s what we think.

It turns out, the rule that most of us live by isn’t always correct, and in fact, it isn’t always true most of the time. Bonds and stocks can, and do, frequently move in the same direction. And that fact adds some serious asset allocation questions to the mix.

Bonds and Stocks Zigzagging at the Same Time

Ask anybody and the general theory is that bonds will move in the opposite direction to stocks. That is, they are negatively correlated. This idea about how they move in opposite directions is why most of us use bonds as a hedge in our portfolios. If the markets are moving lower, bonds will provide the ballast and move higher. This is the essence of diversification.

And for the most part, this has been true. Since the tech bubble burst back in 1998, correlations between stocks and bonds have been negative. They’ve provided the ballast to a portfolio.

To read the Full Story, Go Premium or Log In

Popular Articles

Premium Shutterstock 651131272
News

Honeywell Continues to Improve in Rank on Most Watched Stocks List

Last week, we reported that Honeywell moved up one spot on the Most Watched Stocks List. This...

Premium Shutterstock 190440584
News

Invesco Says: Start to Samba

Boy, what a difference a few years make. For Brazil, it’s the turnaround it so badly needed.

The...

News

Starwood Waypoint Homes Decreases Dividend by 50%

Every day, companies across the globe announce upcoming dividend payouts. You can find the...