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Strategies & Market Trends : Guidance and Visibility

AAPL 272.16

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Dec 18 3:59 PM EST

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To: Softechie who wrote (67937)	8/16/2002 7:15:55 AM
From: ChrisJP	Read Replies (1) of 208838

The truth about the record low bond yields .... Why are bond yields so low and going lower ? I'll tell ya why. Remember the individual investor ? You know the guy who sold $100B plus in stock mutual funds over the past 2 - 3 months. When they called their brokers and 401K managers to sell, where do you think they told them to put their money ? And what about their weekly 401K contributions ? Where do you think they're going every week ? That's right, every week, bond funds have to buy billions of dollars of bonds. So supply and demand makes the bond prices go up. Just like stocks went up in 1998 - 2000 even though they were grossly overvalued. The smart money is probably buying bonds too, but they're also buying stocks. Because stocks actually provide competitive yields to bonds now. And the PE of the S&P 500 is probably at or below 1/(bond yield * 100). Once again, the public is buying at the top -- this time it's bonds instead of stocks. Regards, Chris

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