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Consuelo Mack's WealthTrack: Guest: Robert Kessler, Founder & CEO Kessler Investment Advisor

FYI: In a WEALTHTRACK Exclusive, Treasury Bond manager Robert Kessler warns of recession ahead & which U.S. Treasury securities are the purest play on Federal Reserve interest rate policies
Regards,
Ted

https://wealthtrack.com/treasury-bond-maven-robert-kessler-warns-of-recession-ahead-where-to-take-shelter/

Robert Kessler Website:
https://www.kesslercompanies.com/about/robert-kessler/

Comments

  • Can anyone help me understand what he is talking about right around the 22:00 minute mark?


  • Seems to me he is saying - if the Fed cuts rates 1% his market projections predict stocks will fall 16% and 2 yr treasuries will increase 2%. With that in mind, maybe for every 10% you have in stocks you should be leveraged to 80% in 2 yr treasuries.

    He doesn’t make the point clearly & Consuelo seems to brush it off really quickly. If that is true, it is Interesting that she was aware that that’s what he was saying.
  • edited April 11
    Possibly a graduate of The Bernie Madoff School of Accounting?

    Haven’t watched entire video. From the mentioned discussion point it seems he’s attempting to demonstrate that an equal probability of risk (ie loss) can be achieved by investing 8X the amount of money in 2-year T Bills as in stocks. And at the same time he seems to be suggesting that the potential gains would be 8X higher with his bond position as for stocks with only equal amounts of downside risk. Be suspicious of his claim that “everybody in the business knows this”. (Get the feeling you’re being talked down to?)

    The analysis is incomplete / faulty on many levels. His 16% assumption about the “average” stock market sell-off / gain is out of thin air. He cites a 16% sell-off last December as some sort of proof. Obviously, a stock sell-off / gain can be of greater or lesser magnitude (and not necessarily equal). He claims treasury bonds were the only asset class to increase in value in December 2018. Misses completely that gold climbed 5% during the month.

    He seems to imply that a half-percent cut in the fed rate would translate into a 2% increase in the value of 2 year Treasury. That might be true, I can’t find any charts or calculators that might prove or disprove the assumption. But I also doubt that the correlation is as direct as he suggests.

    His case rests on the assumption that by multiplying the bond term (2 years) X 8 you come up with a risk quotient equal to that magical (probable) 16% gain or loss in equities. Somehow this is supposed to translate into 8X the gain potential in 2 year treasuries as for equities. Makes no sense (he’s comparing entirely different concepts). However, it’s impossible to analyze precisely without at least knowing how much the value of that 2-year bond would be affected by a half-percent drop in rates.

    Confuse, offucsate and misdirect - Maybe no one will notice.:) Possibly Mack didn’t understand - or it’s equally possible she decided to let the idiot’s words speak for themselves.
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