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To: patron_anejo_por_favor who wrote (45534)	7/14/2002 11:19:01 AM
From: ild	Respond to of 209892

<<<Will be interesting if more and more pension fund managers (who are saddled with the "fixed liability" problem) come around to their way of thinking, though. >>> Patron, this is very interesting point. Biderman thinks that pension fund managers may want to gamble again and buy more stocks. REBALANCING ADDED $90 BILLION TO EQUITY MARKETS DURING OCTOBER- EARLY NOVEMBER 2001. Pension and Investments November 12, 2001 issue broke the story that pension funds sold an estimated $90 billion in bonds and then bought $90 billion in stocks during the first month and a half of the 4Q of last year. That buying was enough to source the end of September 2001 21% rebound from the S&P 500 low of 966 to 1170 on December 5. That 1170 on the S&P 500 was then retouched in January and again reached March 19. Will pension funds throw away another huge amount of cash this July as they did in October in the name of rebalancing - whatever that is? They have the same reason to. Last year, from the end of June 2001 to the end of September 2001, yields on the 10 year Treasury dropped 15.3% from 5.39% to 4.57%. This go around, yields on the 10 year Treasury have dropped 10.7% from 5.33% at the end of March 2002 to 4.76% last Friday - just 19 basis points higher than the September 2001 close, with one more week to go. Last year, stock prices, using the S&P 500, also dropped 15% -- the same as bonds rose -- from 1224 at the end of June 2001 to 1040 at the end of September 2002. This time, the S&P 500 has dropped 13.8% to 989 last Friday from 1147 at the end of March. $60 TO $90 BILLION REBALANCING BASED BUYING POSSIBLE IF PENSION FUNDS PERSIST IN THEIR FOLLY. The bottom line on all this, if pension funds continue to rebalance to the extent they did and got killed for doing it during the 4Q of 2001, then they could pump as much as $60 to $90 billion into the stock market in a few short weeks. That conclusion comes from looking at the comparable drops in stock prices and rise in bonds between the end of the 2Q of 2001 with the end of the 3Q of 2001 with the end of the 1Q of 2002 and the week away end of the 2Q of 2002. To sum it up, the drop in stocks and rise in bonds during the 2Q of 2002 appears to be about 70% as much as the comparable rise and fall during the 3Q of 2001. Although with one seemingly bearish week to go, the rise of bonds and the fall of stocks could end up being the same. At this moment we have no way of knowing if rebalancing will or will not occur. If any reader out there knows first hand of what to expect, please let us know - off the record if necessary. trimtabs.com