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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (4537)	1/7/2004 2:32:57 PM
From: Crimson Ghost	Respond to of 110194

Corporate credit spreads indeed have a lot to do with the stock market. Stocks should be OK as long as junk bonds are acting well.

To: mishedlo who wrote (4537)	1/7/2004 11:54:34 PM
From: Cy B	Respond to of 110194

There appears to be a fundamental flaw in this analytical technique.If one wants to know if corporate bonds can predict equity declines, the title of the article, one doesn't start by looking only at the times equities decline and then see what happened to bonds only during those periods. One must start with bonds and see if drops in bonds can predict drops in equities. By only studying the periods when equities dropped, the author excluded knowing if there were also times when bonds dropped and equities rose. If he doesn't answer this question then how can he know if drops in bonds predict anything. His implication that since bonds dropped almost all the times equities dropped, (except the times he can explain with exceptions) then drops in bonds predict equity drops is flawed logic. It's like concluding that drops in ABC stock predict recessions because if I study every recession, I see that ABC stock dropped. Therefore drops in ABC stock predict recessions. NOT. More importantly it he doesn't know how to do basic analysis, what good is the study at all and why should we even consider the conclusions, they are worthless.