One of them is lying!
Remember when the Fed started raising rates in early 2022? The market took a hit, and borrowing rates, such as the 10-Year Yield,
for companies shot up.
Just take a look at the chart below! The Nasdaq and the 10-Year Yield (inverted) have been moving hand in hand since the market
peak. This makes sense as tech stocks, which tend to do quite a bit of borrowing to fund business growth, now have lower present
values.
However, this quarter the correlation took an unexpected turn as euphoria surrounding AI led to an unprecedented surge in prices
for mega-cap companies, causing a significant divergence between the two lines.
Is one of the lines not telling the truth? So far, the Fed has been mum about decreasing rates. Thus, it is imperative for investors to
adopt a disciplined investment approach that prioritizes risk management, enabling them to navigate diverse market environments
with resilience.