Matthew, yes, i do believe so at this time. bonds and stocks have decoupled as of July of last year, and this decoupling still exists, even though we have had short periods of late during which the traditional relationship seemed to re-assert itself. my expectation is this: we could see the bond make a final wash-out low some time in the next three weeks; once the bond begins to break toward this low, equities should begin to decline in sympathy.
thereafter, i expect a sudden shift, which would conform to LG's expectations, that could see assets being redeployed out of equities and into bonds, similar to what happened last year. the reason will not be readily apparent, but as LG has said, we must expect that a certain percentage of investors will take defensive measures because of Y2K.
note that it takes only a small percentage of the capital invested in stocks to leave for bonds to create a big decline in the former and a respectable rally in the latter.
if this expectation is correct, it should play out within the next 3 - 6 weeks at the latest.
regards,
hb |
