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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED
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To: Jim Willie CB who wrote (35882)4/16/2001 11:09:12 PM
From: CAtechTrader  Read Replies (1) of 65232
 
Balanced pension funds are selling the bonds down. Here is how it works. Let's say a balanced fund has a policy of 60% equities and 40% bonds, well the dollar value of the equities has decreased substantially and the bond portion has increased or held steady. Thus the fund becomes unbalanced and automatically has to rebalance by selling bonds and buying stocks to get the dollar value back to 60/40. Most mark their balance to market at the end of a quarter and rebalance over the subsequent 30 day period. As equities were demolished in the 1st quarter, the bond sales are far more than one would expect at what is also a seasonally weak time for bonds. There are literally 100's of billions invested in this manner in not more than a trillion. I would read nothing more into it than that. I expect the dollar to hold steady. Japan is in the toilet and who wants to give their hard earned money to the Euro-crats and their socialism.
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