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The week's question
In March 2025, in the thread "Re: OT, out", Umm asked the members: "Do you think it is because America is made up of magical soil that makes businesses based in America magically profitable?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Investment Strategies / Mechanical Investing
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Author: Olivier ✸  😊 😞
Number: of 6243 
Subject: Re: An old monetary indicator
Date: 09/17/26 2:42 PM
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No. of Recommendations: 9
Another use of 2-year Treasury yield - Federal funds rate: mailchi.mp - Portfolio simulations made simple. This was published after yesterday's hike.
They assess that "When we subtract the fed funds rate from the 2-year Treasury yield, we get one number: how many more hikes the bond market expects." I guess they divide that spread by .25 (the "standard" hike) to get the number of hikes. I'm not sure that's really true (term premium would be an issue) but maybe it's close enough to gauge future hikes?

They test SPY B&H vs SPY only when 2Y - Fed Funds < .5, and find CAGR is increased from 8.6% to 10.6%, with a MDD reduced from 55% to 36%
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This community has written 6,227 posts about Mechanical Investing. The article-length ones it recommended most:
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