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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (36017)	8/26/2005 1:51:23 PM
From: Knighty Tin	Respond to of 116555

I wish it was just hedge funds and central banks. But pension funds have not lowered their bond allocation. Asset allocation funds tend to have the same bond allocation no matter what rates are. Investors have been sold a bill of goods on financial planning, so they are buying bonds as part of reaching their long term goals. After all, the planner told them that they needed bonds to offset the risk in their equities, though that doesn't always happen. Sometimes both go up and both go down at the same time. Retired folks don't have a lot of alternatives. They need income, so they buy bonds, CDs and/or annuities. Trust funds buy bonds for everyone because they are "prudent men." And any time anyone gets scared, they engage in a flight to quality, which is somehow translated as Treasury Bonds.