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Strategies & Market Trends : Waiting for the big Kahuna
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To: randy kay who wrote (2004)7/4/1997 3:08:00 PM
From: GROUND ZERO™   of 94695
 
Randy,

No one here is an expert. Although professional economists are the only ones I know of who can always be wrong and still have a successful career.

Now, to your question about where the money is going. I believe smart money is going into bonds for the moment. This is probably why rates are dropping, not to discount a recent post by HH who correctly points to an economic slow down.

You're correct that bonds were at a major low in 1987. The day of the '87 market crash bonds turned up very violently. That was due to market investors who sold out in the crash finding bonds to be a safer haven for their cash. This is what's happening to the bond market today, only in slow motion. You'll notice that during this last DOW consolidation, rates began ticking upward. But investors who just exited the market are parking their cash in bonds. This stopped the upward ticking and bonds began to rise again and more rapidly. Look at yesterday's move. Bonds moved up over a full point.

In 1987, a high guaranteed rate was better than losing everything in what was then perceived to be a repeat of 1929. Of course, October 19, 1987 was the day of the 508 point drop AND the low in the crash. It all happened in two days. I guess it was just a two day correction, but, man, it was the mother of all corrections.
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