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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Box-By-The-Riviera™ who wrote (52875)	2/6/2006 8:20:31 PM
From: mishedlo	Read Replies (1) of 110194

The problem is we know there is a risk premium but we do not know if it is enough. What happens if Israel decides to take out Iran's nuclear program? A risk factor of 20% or even 50% might be way way too low. If nothing happens the risk factor may be 5 to 20% too high (although I think 20% is too high - more like 10% - but we are both guessing). IF (big IF) things quiet down, I am inclined to believe Slim Pickens who thought oil would fall back to $50. Hmmmm a drop of $15 here would be about 23% But but but... How much of that would occur because of declining world economy vs decline in risk premium. Perhaps we see a drop to $50 AND STILL have the same risk premium. Is that possible? Given the complex situation I do not know if we can ascertain the risk premium or even judge if it is too high or too low. All we can say for sure (I think) is that it does exist. I think $10 is about correct but does correct mean right even if I am right? Mish

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