In 1994 rates rose 3% but Wellesley ended the year down only 4% the stock market that year went up about 1% can someone

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
iamblessed
Posts: 734
Joined: Sat Jun 09, 2018 11:52 am

In 1994 rates rose 3% but Wellesley ended the year down only 4% the stock market that year went up about 1% can someone

Post by iamblessed »

explain to me how Wellesley did not lose more that year?
User avatar
cheese_breath
Posts: 9828
Joined: Wed Sep 14, 2011 7:08 pm

Re: In 1994 rates rose 3% but Wellesley ended the year down only 4% the stock market that year went up about 1% can some

Post by cheese_breath »

Have you considered dividends?
The surest way to know the future is when it becomes the past.
bumbojumbo
Posts: 23
Joined: Sun Feb 04, 2018 3:25 pm

Re: In 1994 rates rose 3% but Wellesley ended the year down only 4% the stock market that year went up about 1% can some

Post by bumbojumbo »

From 1994:
LEHMAN LONG-TERM CORPORATE BOND INDEX -5.8%
STANDARD & POOR'S 500 STOCK INDEX +1.3%

Assuming Wellesley was 40/60:

(1.3 * .40) + (-5.8 * .60) = -2.96%

The fund underperformed its index.

https://sec.report/Document/0000893220-95-000089/
Robot Monster
Posts: 1522
Joined: Sun May 05, 2019 11:23 am
Location: New York

Re: In 1994 rates rose 3% but Wellesley ended the year down only 4% the stock market that year went up about 1% can some

Post by Robot Monster »

From 1994-1995, the 10yr went from 5.92% to 7.88%, which is a change of 1.96%. How are you arriving at a 3% rise that year?

Source of my info
"Happiness comes from being connected in the right ways to: other people, your work, something larger than yourself."
bumbojumbo
Posts: 23
Joined: Sun Feb 04, 2018 3:25 pm

Re: In 1994 rates rose 3% but Wellesley ended the year down only 4% the stock market that year went up about 1% can some

Post by bumbojumbo »

From Vanguard 1994:
"[...] our equity position--designed to produce above-average yields--was heavily invested in some
of the most yield-sensitive securities of the equity market. These stocks
suffered equally with--and in some cases even more than--the bond market."
https://sec.report/Document/0000893220-95-000089/
Last edited by bumbojumbo on Sun Sep 13, 2020 2:15 pm, edited 1 time in total.
Jags4186
Posts: 5119
Joined: Wed Jun 18, 2014 7:12 pm

Re: In 1994 rates rose 3% but Wellesley ended the year down only 4% the stock market that year went up about 1% can some

Post by Jags4186 »

iamblessed wrote: Sun Sep 13, 2020 1:01 pm explain to me how Wellesley did not lose more that year?

Because Wellesley is an actively traded fund and it’s bond and stock positions are not 60% total bond market 40% SP500.
Topic Author
iamblessed
Posts: 734
Joined: Sat Jun 09, 2018 11:52 am

Re: In 1994 rates rose 3% but Wellesley ended the year down only 4% the stock market that year went up about 1% can some

Post by iamblessed »

Robot Monster wrote: Sun Sep 13, 2020 1:36 pm From 1994-1995, the 10yr went from 5.92% to 7.88%, which is a change of 1.96%. How are you arriving at a 3% rise that year?

Source of my info
Closer to 2% I knew the Fed raised rates several times that year.
Thanks
Post Reply