As Marc Faber famously stated: "You can print money, but you can't control where the money will flow into." This is the most important line that investors need to keep in mind when we are talking about decoupling.
Since Ben Bernanke announced QE3 on September 13, 2012, we all know money is going to be created out of thin air. We just don't know where the money will flow into eventually, we can only observe.
As you may know, I started monitoring the correlation between stocks, bonds and cash since June 4th, 2012. Peter Schiff forecasted that once the decoupling started (meaning that stocks and cash drop at the same time), then the bond market would plunge. (Normally the U.S. dollar would strengthen when stock markets drop.)
Since a month now, the decoupling has started to emerge (Chart 0). As you can see the green, red and blue dots are all trending down since a month.
To see what this decoupling actually means for you, go here.
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| Chart 0: Decoupling between Stocks - Bonds - Cash |
To see what this decoupling actually means for you, go here.
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