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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: robert b furman who wrote (18366)	8/8/2016 11:48:01 AM
From: John Pitera	1 Recommendation Recommended By 3bar Read Replies (1) \| Respond to of 33421

Hi Bob, worse than the slow grind of holding to maturity.. a large increase in interest rates will case an immediate mark to market decline in the the price of the long term bond portfolios that insurance companies, pension funds, endowments, universities, sovereign wealth funds, institutional and retail investors. Those losses are actually able to become even larger as companies and countries have taken to issuing 40, 50 and even 100 year debt. Those loses to the value of portfolios will be very real. The Global bond markets and indeed many of the sovereign bonds markets are a time bond 100 times bigger than the collapse of the CDS /CLO Fannie, Freddie and the real estate markets in 2008. You are right that Trillions of dollars have been made this age of financial engineering which has been one long episode of an explosion of financial products and complexity with the advent of the microchip and the PC. 1/100th of the financial products, derivatives and related items existed in the early 1970's when TXN came out with their first programmable calculator. And yet opportunities will continue to exist and flourish.... Thus is the nature of the capitalist system. I guess that's why when JP Morgan was asked what the market would do..... he insightfully commented that "Prices will Fluctuate" John