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The flight-to-quality trade
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AT-October 2008-8
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Popular perception aside, the sell-stocks/buy-bonds trade only emerges under certain circumstances.
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Detailed Description
While many traders can spend their entire careers without meeting anyone describable as "cultured," we all live within a culture nevertheless. A culture is nothing more than a shared, learned system of beliefs, those unwritten rules and mental codes that guide our daily behavior.
Any guide to superstitions is full of interesting stories about why we consider it unlucky to break mirrors, walk under ladders and so forth. None of them, unfortunately, have stories about why Treasury notes and bonds get bid higher as soon as the stock market starts to wobble in a big way.
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