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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Matthew L. Jones who wrote (28875)	10/8/1999 7:40:00 PM
From: Benkea	Read Replies (2) \| Respond to of 99985

Matt: "Do you think that the bond bottoming must correspond to an equity top?" Warren Buffett's almost 100% equity comprised BRK announced a stock for stock merger with GRN who was almost 100% bonds in June of 1998. This was "coincidentally" about a month before equities crashed and bonds hit a multi-decade high (low yield). The guy also bought zeros and sold them only a quarter or so before the multi-decade low (high for the zeros). Last quarter, he moved the $10 bil in cash to bonds! Follow Buffett because no ones' timing is better. BTW - he was out of stocks before the 1987 crash and the early 90s recession with the exception of a couple of "permanent" holdings.

To: Matthew L. Jones who wrote (28875)	10/8/1999 7:50:00 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 99985

Matthew, yes, i do believe so at this time. bonds and stocks have decoupled as of July of last year, and this decoupling still exists, even though we have had short periods of late during which the traditional relationship seemed to re-assert itself. my expectation is this: we could see the bond make a final wash-out low some time in the next three weeks; once the bond begins to break toward this low, equities should begin to decline in sympathy. thereafter, i expect a sudden shift, which would conform to LG's expectations, that could see assets being redeployed out of equities and into bonds, similar to what happened last year. the reason will not be readily apparent, but as LG has said, we must expect that a certain percentage of investors will take defensive measures because of Y2K. note that it takes only a small percentage of the capital invested in stocks to leave for bonds to create a big decline in the former and a respectable rally in the latter. if this expectation is correct, it should play out within the next 3 - 6 weeks at the latest. regards, hb