SPY/TLT And SPXL/TMF Strategies Work Because Of Positive Alpha, Not Negative Correlation | Seeking Alpha

SPY/TLT And SPXL/TMF Strategies Work Because Of Positive Alpha, Not Negative Correlation | Seeking Alpha



This is an excellent article about combining bond and stock ETFs to form an above average return as long as the stock market trend is up.  This SPY/TLT or SPXL/TMF strategy works because people often buy bonds or bond stocks in volatile times.  They want the security of bonds because they seldom trust stocks.  This is why TLT (long bonds) and TMF (leveraged long bonds) have been going up the past six years along with stocks.  Certainly, there are times when TLT and SPY will go in opposite directions, but the overall trend of both has been up.  Thus, you can probably make money with one of these bond/stock pairs until we enter the next bear market, and nobody knows when that will happen.  This is a good plan to try as part of a diversified portfolio.