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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Bearded One who wrote (11969)	12/20/1997 2:12:00 PM
From: Tommaso	Read Replies (1) \| Respond to of 18056

Well, of course I agree with you that we don't need a recession for the market to tank, but the prospect of a recession would make the tanking even more likely and more drastic. And, it appears from that study of interest rates, any time longer-term treasuries are yielding a couple of percentage points less than 6-month t-bills a recession is almost inevitable. So I was speculating about how such a yield gap could occur without intervention by the Fed. What is fascinating about economics and finance is the way that all the factors involved are moving targets and are influenced by one another so that cause and effect are hard to distinguish. A very few people seem to have an instinctive grasp of these and have the independence to act on what they know or feel. Templeton and Buffet seem to be two such examples--so (without having any idea why) when I heard they were into bonds I committed a lot of my wife's retirement money and IRA to bonds. The treasury strips continue to do spectacularly well for such a conservative investment. One thing I learned the hard way is not to listen to the plausible theories of people such as Paul Erdman, who had served time in a Swiss prison. It's best to listen to honest people. Oh--more anecdotal evidence. Spoke last night with a brother-in-law who is a long-time banker, trust officer, investment director. I am afraid I remember his saying all during 1974-1982, "Things don't look good for equities." Now he is still angry at Greenspan for what he sees as irresponsible meddling by Greenspan in making any sort of public comment on the stock market. He sees yesterday's action as "A lot of portfolio adjustments; things will calm down once we get into the new year." I could tell that he was impervious to the case for a bear market.