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Is this a correct analysis of TLT (iShares 20+ Year Treasury Bond):

It was hammered by QE talk in May. It will continue to generally drift lower while QE is in effect or even being tapered and the Fed rate is not rising.

But, if SPX (S&P 500) starts falling, TLT will generally rise as investors seek safety. This will temporarily buck QE and Fed rate effects.

What might be wrong with this thinking?

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A drop of 20% is what we called "hammered" these days? TLT's high in May was 124 and now is about 102, so I find that a bit dramatic language in the first line. The next sentence seems fine for a guess as to what will happen going forward.

If the S & P 500 starts to fall, I'd think there are other options where investors may seek safety as long-term bonds aren't a great option and I'd suspect there are short-term bond ETFs or money markets that may make more sense given the swings that may make one question the alleged "safety" if someone like this can be "hammered" to this degree. Really, what kind of person would call a security that has a drop of 20% that is still viewed as "safe" really?

Course the first sentence is the only sentence that is past analysis. The rest is speculation that may or may not be correct as really only with hindsight would this be known.

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I just downloaded daily 2 year price data for the two symbols (2012 and 2013) and then placed them in a spreadsheet. I calculated two correlation coefficients, one for 2012 and one for 2013. In 2012, the correlation coefficient is approximately 0.16 and in 2013, it's approximately -0.78.

A 0.16 correlation coefficient in 2012 means they both move in the same direction, but they are weakly correlated. A -0.78 correlation coefficient in 2013 means they move in opposite directions, and they are strongly correlated.

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