---
title: A Trend Will Continue Until It Can No Longer
description: Bond yields have been falling since 1981 & Ray Dalio believes we have reached an inflection point. Where will capital flow to if it leaves the bond market?
image: https://blog.gorozen.com/hubfs/Blog%20Images/2019-Chart-Blog-163-LinkedIn.png
---

[![GoRozen logo](https://blog.gorozen.com/hs-fs/hubfs/Gorozen_July2023/images/629a25c15755c930be0d624f_GoRozen-logo-horizontal-web.png?width=444&height=79&name=629a25c15755c930be0d624f_GoRozen-logo-horizontal-web.png "GoRozen logo")](https://www.gorozen.com/)

- FIRM

    - [HOME](https://www.gorozen.com/)
    - [ABOUT](https://www.gorozen.com/about)
    - [TEAM](https://www.gorozen.com/team)
- CONTENT

    - [COMMENTARIES](https://www.gorozen.com/commentaries)
    - [BLOG](https://blog.gorozen.com/blog)
    - [PODCASTS](https://www.gorozen.com/podcasts)
- HOW TO INVEST

    - [MUTUAL FUND](https://www.gorozen.com/gr-funds)
- [CONFERENCE](https://conference.gorozen.com/)
- [CONTACT](https://www.gorozen.com/contact)

[access latest research](https://www.gorozen.com/commentaries)

![Banner](https://blog.gorozen.com/hubfs/Gorozen_July2023/images/post-image.webp)

## A Trend Will Continue Until It Can No Longer

08/22/2019

“*A Trend Will Continue Until It Can No Longer*.” This saying ultimately has two related meanings. First, a trend may persist far longer than reason or logic would dictate. Second, the trend will finally reverse when it can’t be pushed any further. The recent trend that has pushed commodity prices down to relative levels not seen in nearly a century has certainly gone on longer and further than we believe reason dictates. **The question is whether it has now gone as far as it can go.**

 

We believe the recent period of commodity valuation is only one half of a broader trend. The other half represents a surge of capital into various asset classes and strategies. For example, huge capital flows into passive strategies, FAANG stocks, and bonds represent the flip side of the capital flow out of commodities and natural resource-related investments. **Over the last 12 months alone, we estimate that natural resource-related mutual funds have lost nearly 10% of their assets via net outflows.** At the same time, we are nearing the point where more assets are held in passive vehicles than active ones.

 

The now 39-year-old bond bull market is perhaps the most impressive of all and the inflows into bond ETFs continue to surge. Since peaking in the summer of 1981 (the US 30-year Treasury bond reached 15.3% yields), government bond yields have fallen relentlessly.

 

**30-year U.S. Treasury Yield**

[![30 Year US Treasury Yield](https://blog.gorozen.com/hs-fs/hubfs/Blog%20Images/30%20Year%20US%20Treasury%20Yield.png?width=600&name=30%20Year%20US%20Treasury%20Yield.png)](https://blog.gorozen.com/hubfs/Blog%20Images/30%20Year%20US%20Treasury%20Yield.png)*Source: [Macrotrends.net](https://www.macrotrends.net/2521/30-year-treasury-bond-rate-yield-chart)*

 

While a sensible investor might think that the zero bound represented a reasonable limit for bond prices, that clearly did not stop bonds from rising further and pushing yields negative. As we write, $13 trillion of sovereign credit around the world carries negative interest rates. Clearly the trend has persisted much further than reason would dictate.

 

With that in mind, we found it incredibly interesting to read **Ray Dalio’s comments** from several weeks ago. Bridgewater Associates pioneered the risk parity strategy that recommends (among other things) maintaining a levered exposure to fixed income. As such, we believe he is a bellwether when it comes to the bull market in bonds. **In his article he outlines two key investment philosophies.**

1. First, he believes it is important to identify the trend in place and invest in such a way as to profit from it.
2. Second, it is critical to identify the inflection point marking a change in trend.

![Ray Dalio](https://blog.gorozen.com/hs-fs/hubfs/Blog%20Images/Ray%20Dalio.jpg?width=600&name=Ray%20Dalio.jpg)

*Ray Dalio, founder of investment firm Bridgewater Associates, speaking at the WEF in Davos, Switzerland on January 22, 2019.*

*Image Source: [CNBC.com](https://www.cnbc.com/2019/05/01/billionaire-ray-dalio-bought-his-first-stock-at-age-12.html)*

 

Mr. Dalio goes on to explain how today’s bond market has been bid up to the point where it can no longer deliver the returns that most investors expect. While we agree with Mr. Dalio’s comments, the same argument could have been made any time over the last several years. Why now?

 

The bond bellwether is telling you that he believes the inflection point in the nearly four-decade-long bond trend is now upon us. Mr. Dalio has been incredibly prescient in recognizing this trend and in understanding just how far it can go. The fact that he believes it has now been pushed too far is extremely telling. If he is correct, then the massive unwinding of several related investment manias will likely follow.

 

We have written extensively about the significance of the recent Bloomberg BusinessWeek’s cover story “Is Inflation Dead?” Combining the investment significance of the Bloomberg BusinessWeek cover story with Mr. Dalio’s comments gives us additional conviction that a massive shift in capital flows is about to take place.

 

All of these trends in capital flows have helped push the price of various assets to unsustainable levels. On the other side of the trade, commodities and natural resources have been pushed far too low. The combination of these trends helped push the valuation of commodities relative to the broad market to levels nearly as low as they have been in 100 years. A massive shift in capital flow is about to take place into an asset class where no one has any exposure. The profits for investors in the natural resource and commodity-related investments are going to be large.

 

 

This blog contains excerpts of our in-depth commentary, **"The Gold Bull Market is Here"*****.*** If you are interested in this subject, we encourage you to [**download the full commentary here**](https://info.gorozen.com/2q-2019-goehring-and-rozencwajg-commentary).

  

[![NEW Q2 2019 G&R RESEARCH: "THE GOLD BULL MARKET IS HERE"](https://no-cache.hubspot.com/cta/default/4043042/1bc6cace-556c-4771-b7e8-7f876fd2395a.png)](https://cta-redirect.hubspot.com/cta/redirect/4043042/1bc6cace-556c-4771-b7e8-7f876fd2395a)

 

[Back](https://blog.gorozen.com/blog)

### Stay informed with Natural Resource Market Insights

### Recent Posts

Goehring & Rozencwajg Associates, LLC. The information provided on this website is intended to provide the investor with an introduction to Goehring & Rozencwajg Associates, LLC. Nothing on this website should be construed as a solicitation offer, or recommendation to buy or sell any security or as an offer to provide advisory services. Information on this website is intended only for United States citizens and residents. Nothing contained on this website constitutes investment, legal, tax, or other advice nor should be relied upon in making an investment or other decision. Investors should always obtain and read an up-to-date investment services description or prospectus before deciding whether to appoint an investment advisor or to invest in a fund.

This material may include estimates, outlooks, projections and other “forward-looking statements.” Due to a variety of factors, actual events or market behavior may differ significantly from any views expressed. Investing entails risks, including possible loss of principal. Investments concentrated in natural resources involve a higher degree of risk than more diversified strategies. **Past performance is no guarantee of future results.**

Investment process, strategies, philosophies, portfolio composition and allocations, security selection criteria and other parameters are current as of the date indicated and are subject to change without prior notice.

Neither rankings nor recognitions by unaffiliated rating services, publications, media, or other organizations, nor the achievement of any professional designation, certification, degree, or license, membership in any professional organization, or any amount of prior experience or success, should be construed by a client or prospective client as a guarantee that the client will experience a certain level of results if the investment professional or the investment professional’s firm is engaged, or continues to be engaged, to provide investment advisory services. A fee was not paid by either the investment professional or the investment professional’s firm to receive the ranking. The ranking is based upon specific criteria and methodology (see ranking criteria/methodology-to the extent applicable). No ranking or recognition should be construed as an endorsement by any past or current client of the investment professional or the investment professional’s firm.

Certain links may let you leave the Adviser’s website. The linked websites are not under the control of the Adviser, and we are not responsible for the content of any linked website, or any link contained in a linked website, or any changes or updates to such websites. Adviser is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, investigation, verification or monitoring by us of such third-party website. Any references to outside data, opinions or content are listed for informational purposes only and have not been verified for accuracy by the Adviser.  Third-party views, opinions or forecasts do not necessarily reflect those of the Adviser or its employees.

Unless stated otherwise, any mention of specific securities or investments is for illustrative purposes only. Adviser's clients may or may not hold the securities discussed in theri portfolios. Adviser makes no representations that any of the securities discussed have been or will be profitable.

- [ADV Part 3 - Form CRS](https://blog.gorozen.com/hubfs/Compliance%20Files/Goehring%20%26%20Rozencwajg%20Associates%20CRS%20Form%20ADV%20Part%203.pdf)
- [Cookie Policy](https://blog.gorozen.com/hubfs/Compliance%20Files/G%26R%20Cookie%20Policy.pdf)
- [Privacy Policy](https://blog.gorozen.com/hubfs/Compliance%20Files/G%26R%20Website%20Privacy%20Policy.pdf)

Goehring & Rozencwajg Associates LLC © 2023

```json
{
  "@context" : "https://schema.org",
  "@type" : "BlogPosting",
  "author" : {
    "@type" : "Person",
    "name" : "Goehring & Rozencwajg Team",
    "url" : "https://blog.gorozen.com/blog/author/goehring-rozencwajg-team"
  },
  "dateModified" : "2019-08-22T15:44:48.518Z",
  "datePublished" : "2019-08-22T15:44:48.000Z",
  "headline" : "A Trend Will Continue Until It Can No Longer",
  "image" : [ "https://blog.gorozen.com/hubfs/Blog%20Images/2019-Chart-Blog-163-LinkedIn.png" ],
  "mainEntityOfPage" : {
    "@id" : "https://blog.gorozen.com/blog/a-trend-will-continue-until-it-can-no-longer",
    "@type" : "WebPage"
  },
  "publisher" : {
    "@type" : "Organization",
    "logo" : {
      "@type" : "ImageObject",
      "url" : "https://blog.gorozen.com/hubfs/Logos/GoRozen-logo-web.png"
    },
    "name" : "Goehring & Rozencwajg"
  }
}
```