5-Chart Friday (2/14/20)

By Charlie Bilello

14 Feb 2020

5 charts from the past week that tell an interesting story in markets and investing…

1) Growth vs. Value

The ratio of growth stocks to value stocks is at its highest level in 19 years.


The top 10 holdings in the large cap growth ETF (IWF)…

The top 10 holdings in the large cap value ETF (IWD)…

Which basket would you rather own over the next 10 years?

2) There is No Impossible in Markets, Greece Edition

In March 2012, Greek 10-Year Bond Yields were north of 40%.

This week, they crossed below 1% (vs. US 10-Year Yield of 1.6%).

Has the debt been forgiven? Not exactly…


Another reminder that there is no impossible in markets.

3) Ethereum & Efficient Markets

Crypto fever is back.

New investors in the Ethereum Trust (ETHE) paid $99.50 this week for assets worth $24.13, a premium of over 300%.

Under the efficient-market hypothesis (EMH), which assumes that investors are “rational,” this should never have happened.

Arbitrageurs should have stepped in, shorting the trust while buying the underlying holdings to earn a “riskless” profit. In an efficient market, no investor would have chosen to buy ETHE at a 312% premium when they could buy the underlying holdings at no premium at all.

Wonderful in theory, but in the real world investors are anything but “rational.” And as such, the market is not entirely efficient.

4) Fed Balance Sheet Boom

The Fed balance sheet moved up to $4.18 trillion this week, its highest level in 16 months. In the past five and a half months, its up $423 billion.

“In no sense is this QE. This is nothing like it.” – Jerome Powell, Oct 8, 2019


5) When High Yield Becomes Low Yield

In December 2008, US High Yield bonds yielded more than 23%.

Fast forward to today and High Yield bonds are down to a yield of close to 5%, an all-time low.

And that’s it for this week. Thanks for reading.

Have a great weekend everyone!


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