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Seriously. Under "What Not to Do."

This is just a little after the course refresher note. I was just doing my web due diligence and I saw a piece at SeekingAlpha that offered some quantitative analysis of the bonds versus stocks for the last months of 2006. The analysis is comically flawed. Have fun with it, and rest assured that no (not even one!) Stat 434 student could make such fundamental, logical errors. Were not talking fancy details here, just stone cold stupidity (mixed with a nice dose of ignorance).

Professor Michael Steele calls my analysis "comically flawed" because I did a regression of prices instead of price changes.

ROFLMAO

OK, maybe it's not that comical.

Well, I'll never make that mistake again. In any event, the point I was trying to make was that the stock and bond markets had been rising together until about one month ago. Since then, the two markets have parted ways.

Here lookie:

The S&P 500 is the blue (left scale). The American Century Target 2025 fund (BTTRX), which I used as a bond proxy, is the red (right scale).

Note that even the recent up-and-down move in the BTTRX is mirrored by an opposite move in the S&P 500.

Posted by edelfenbein at January 17, 2007 9:57 AM