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Non-Tech : Kirk's Market Thoughts -- Ignore unavailable to you. Want to Upgrade?

To: Chip McVickar who wrote (2412)	12/13/2014 12:18:00 PM
From: Kirk ©	Read Replies (2) \| Respond to of 26834

I'm the first to admit I am surprised at how well long-term bonds did this year. I remember taking profits in tech stocks in late 1999 and more in 2000 as the NASDAQ went up another 30 to 40%. Hard to feel I was not leaving too much on the table as I used the money to buy strip zero bonds, GNMAs, CDs and value stocks that Buffett liked. Buffett lost 19.9% in 1999 as many wrote him off... as money poured out of value into hyper growth that Cramer and others were recommending. Radio and TV gurus sure helped. I have a link to mid 2000 Cramer giving a speech saying your money should only be in 10 stocks that were the new economy even if they didn't make money... I think 6 of Cramer's stocks went under or were absorbed after they collapsed. On the radio, Bob Brinker said to get conservative then told is aggressive investors (who wasn't aggressive back then when aggressive meant super high returns) to put half the cash they raised into the NASDAQ and another 5% into a B2B internet fund, both collapsed. He was "hedged" to brag about the results no matter what. It is no wonder his show was dropped by big stations in major markets and in the Bay Area his show is only on a tiny station with 1/10th the power of the station that carried him in 2000. Great summary, but... Personally, I don't like the word "bond bubble" ...I do not believe this term is an accurate mental image of what's been taking place in the bond markets over the last 8 years and soon will move into it's 9th year... Now we fast forward 15 years and shell shocked investors who still don't understand how bonds work are buying them because they see double digit returns for something they might think is safe.... Bubbles come from dumb money chasing return egged on by radio and TV experts and Distortions in market forces We have both with #1 obvious. Most shows have a ton of bears on to make sure they "give both sides" if nothing else. #2 is the Fed, tax policy and government regulations. The fed crushed the supply-demand curve by sucking up all the government debt needed to keep rates low while regulations and high taxes kept a lot of money outside the US where it was too expensive via taxes and regulation to invest it in the US. IF you want to eliminate currency risk for money overseas, you buy US bonds, even if you get zero return.... then you move assembly and other jobs out of the US to where the currency is so you can spend it to expand. Until the Fed stops reinvesting the QE balance sheet money into new bonds, we have bubble forces there. Lower taxes on corporations and I think we see rates surge also as the money comes back while they sell their bonds.