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Strategies & Market Trends : The Stock Market Bubble -- Ignore unavailable to you. Want to Upgrade?

To: Roger A. Babb who wrote (2855)	8/26/1999 5:50:00 PM
From: RockyBalboa	Respond to of 3339

Interesting graph, indeed. The overvaluation looks now severe: -the rate hike and increased bond yields (since last autumn) shifted the relationship a bit towards bonds. -the risk premium appeared to be negative because of the ever-increasing stock prices (the difference between company equity yields and bond yields). OTOH: In a weak to neutral (or diminishing, or not overheated) economy, the bonds yields tend to fall, especially when the public side is repaying debt (the U.S) is. Hence, while the yield for old bond holders is well above current yield (has always been since mid 1994) the marginal yield for new bond investors tends to be diminishing. What could they do: Buy stocks! ...