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Pastimes : Ask Mohan about the Market

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To: Tommaso who wrote (13959)	2/10/1998 8:28:00 PM
From: Bonnie Bear	Read Replies (1) of 18056

Tommaso: I pulled up a chart from a fund that holds 30-year zero-coupon bonds. Bingo, it lays perfectly on top of the S&P for the last 10 years. Guess I'm a slow learner, I didn't realize this was the way the stock valuation models were programmed into the computers. So the expansion can continue as long as the feds continue to lower interest rates gradually and nobody minds paying for the future discounted 30 years ahead in the price of the stocks. If this is the game then corporate bonds, even here around 6%, are the place to be. what happens when we run out of room to drop interest rates? Do like Japan did to us.....find another country with high interest rates and borrow cheap to invest abroad...force down their interest rates to get the stock market to go up... the cycle continues... so US corporate bonds and international stocks may be the place to be.

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