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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 (49903)	1/16/2006 4:43:34 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 110194

i consider 70% and 20% to be outlier scenarios. not impossible, but highly unlikely. like a big asteroid striking earth and ending civilization in our lifetimes. or that cliff or mountain or whatever falling into the Atlantic and flooding the entire Eastern Seaboard. or space aliens taking over the world. nobody can prove that the above scenarios are impossible within the next, e.g., 50 years. the question is one of likelihood, and (more practically) scenarios for which it makes practical sense to prepare. i don't think it makes practical sense to prepare for $200,000/oz gold in "a few years", as Faber believes. i don't think it makes sense to prepare for 70% interest rates. then again, i was never a childhood guest of Michael Jackson; if i'd lived in Neverland, maybe i'd "think different". as for practical, real world scenarios of highs and lows, i think, on the UST 10yr, a low of 3.5% and a high of 9%, over the next decade. this implies to me that there is more to be lost than won by going long the 10yr, but that it is not necessarily a losing scenario. i think the Asian FCBs will be gradualists in reducing their support for USD (and US interest rates). superhigh US rates and superlow USD will not serve their interests. still, i think there will be upward pressure that could move the 10yr north of 6% over the next decade. if it stays under 3% for the majority of the decade, i will make you my official hero -g-. however, whatever the UST 10yr and 30yr do, i still prefer my Brazilian real-denominated 10yr, purchased last year for 13% YTM. the last lot i purchased, in November or so, was for 95. i called last week about buying some more but was told i'd be lucky to get any for 104, so i didn't buy any more.