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To: Perspective who wrote (263151)	10/9/2003 2:59:25 PM
From: ild	Respond to of 436258

trotsky (frustrated) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved you will see - this mountain of debt will become totally irrelevant to investor's strategies as soon as it becomes clear once again that the stock market harbors much greater risk than previously thought. the risk aversion money, the money seeking income - will come flooding back into the bond market big time imo. the administration can't possibly incur enough debt to satisfy this potential demand, at least not short to medium term. the biggest danger i see to this scenario is that liquidity preference could become so pronounced in this K-winter that everything will be liquefied, including bonds. it happened in the early 30's - t-bonds crashed in spite of nearly 10% annualized PPI/CPI deflation, due to liquidity needs trumping all other considerations. but i deem this to be a highly unlikely development in the modern era. Date: Thu Oct 09 2003 14:28 trotsky (rabbit) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved one more thing: you're right, this is NOT 1979 - it's 2003. a completely different phase in the K-wave, and therefore also a time of near record low ( as opposed to near record high in '79 ) interest rates, coupled with a hole host of other implications. on a long term basis, the current phase of the K-wave would argue for bonds and gold to be the best investments, while stocks and real estate should come under intense pressure as time goes on ( or, as WS pundits like to put it: 'going forward' ) . Date: Thu Oct 09 2003 13:54 trotsky (Apollo, 10:01) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved well, obviously the very same thing that bothers gold at the moment is also bothering the bond market: namely the growing perception that there is a recovery ( even though there really isn't one... ) . my guess is that the bull move in bonds will resume as soon as the stock market rally exhausts. obviously that isn't the case yet - the rally has very likely further to go. however, the fact that bonds and notes are actually holding up so well in the face of all this supposed good economic news ( yields are exactly where they were 1 year ago - as bond bull market corrections go, the current one hasn't even been all that spectacular, aside from the swiftness of the move from the summer top ) is telling enough...at the first hint of bad news, or a weakening in stocks, they're going to rally with gusto again. the Rydex timer short position in bonds is currently 17 times larger than the correspoding long position...it's the most one-sided positioning over the past few months that i have ever seen in a market that is supposed to have topped out, but is in reality not far off multi decade highs. oh, and how about that stock market? it sure has buried the bears, and when it's finished doing that, the bond market will resume to do the same imo.