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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (48217)	2/22/1999 11:07:00 PM
From: BGR	Respond to of 132070

SB, Equity investment being more risky than public debt always carries a risk premium. IOW, if you can get 11% guaranteed from CDs and 11% from a risky market index investment, you will of course put the money in CDs and not in the index. IOW, the CD value will be pushed up (more demand), hence it's yield go down (as is the case in bonds), and the market index value will drop (less demand) till it's return carries a premium over CDs long term on the average. The assumption of course is that the economy doesn't completely implode and continue to do so for ever (in which case both CDs and equity investments may turn out to be bad choices). But you need to be a pessimist of the highest order and completely ignorant of human history to even consider that scenerio. -BGR.