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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Think4Yourself who wrote (207900)	6/23/2009 10:46:25 AM
From: Wyätt Gwyön	Respond to of 306849

actually i don't think individuals will rush in anytime soon. they are still too much under the delusion that capital gains will save the day. most people have a PF consisting of 70-100% long stocks and the rest cash or fixed-income. the stocks pay crap for dividends, and the dividends are going to get cut. the stocks will get cut in half again and a lot of people will be feeling a lot of pain. pension funds are going to start failing. this is going to be a big story in the coming years. what will the govt do? such and such meter maid was promised 50K a year plus benefits for the rest of her life, but the pension mangler lost all the money. these pensions are underfunded, so they HAVE to overinvest in stocks or they mathematically will fail. the irony here is, their overinvestment in stocks only ensures they will fail much faster once the market crshes again. however, another five years of br market will bring them around. before this happens, there needs to be a critical change in expectations. a change from "i want to be rich" to "i don't want to be dirt poor". people were not in bonds in the late 1920s, either. but that's just about all they bought in the 1940s and 1950s, despite SPX div yield exceeding 10yr yield until 1958. i think the mentality will be very different from the stock market or housing bubbles. in those bubbles, people wanted to "get rich quick". for govt bonds, especially with very low nominal yields (like 2-handle on the 30yr), there is no way people will be thinking to get "rich". they will instead be thinking "don't make me any poorer". what could make this happen? a very, very bad stock market. all investor types have too much in stocks. they lost 40 percent last year. they haven't made money in a decade. when they lose half their money again, many will be utterly disgusted by the market. they will either put their money in govt bonds directly, or put their money in CDs (which the banks will put in bonds). btw, it's not like i don't understand why people are b*rish on USTs. it was actually scary for me to put this trade on. but i take that as a GOOD sign, since usually the things that scare me scare everybody else, too. it was much easier to buy gold. but look what's working. this is why i like to have opposing elements in the ole PF. at least something will work.