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Strategies & Market Trends : Galapagos Islands -- Ignore unavailable to you. Want to Upgrade?

To: Jorj X Mckie who wrote (3355)	9/30/2002 12:38:50 PM
From: Petrol	Read Replies (1) \| Respond to of 57110

From today's Daily Reckoning: ************* Sniff...sniff... Reuters reports that more Americans continue to buy stocks. The number of households that own them has risen 7% since the bear market began. And polls show that they still believe in them. A large majority say they are 'long-term, buy-and-hold' investors who believe their stocks will come back to at least what they paid for them... People can believe anything they want, of course, but we merely note that these are not the kind of beliefs that people confess at the bottom of a bear market. Instead, they come to believe that the stock market is merely a tool for redistributing wealth from savers to the financial industry and from outsiders to insiders. But on Friday, oh la la, we smelled the air and we thought we detected a faint aroma of fear, panic...and desperation. Investors - even those who say they are in stocks for the long haul - are beginning to sweat. Consumer confidence is ebbing, say the pollsters at the U. of Michigan. Investor confidence is giving way too, say the stock market and the Confidence Index. The latter index measures investors' preference for super- safe Treasury bonds over the sort put out by people who can't print money. As of Friday, it was down to 70.4 - indicating that bond buyers are increasingly worried about getting their money back. Everybody wants treasuries. A 10-year T-note yields on 3.75%, but that's better than losing money. Eric says even Mom & Pop are moving from equity funds to bond funds. So high have bonds been run up that people are beginning to speak of a 'bubble' in the bond market and beginning to worry that higher levels of inflation will force up yields and destroy bond prices. Could be. But if there is a bubble in bonds, we wouldn't be surprised to see it get even bigger than it is now.