Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Knighty Tin who wrote (61324)	6/3/1999 2:19:00 PM
From: valueminded	Read Replies (2) \| Respond to of 132070

Mike: You sound confident on your prediction that rates are near peaking and ready to move down. Since you are much better educated in these areas than I, could you give me your reasoning. Also, please clarify the error of my reasoning - (or at least give me your rebuttal) as it will help me tremendously. My reasoning for companies: Companies are borrowing to buyback stock - (no "shortage" of what to spend it on so borrowing to continue) Banks are willing to lend to companies as both they & companies are perceived to be in "good financial health" Companies believe that their return on equity (read return on borrowings) is in excess of the interest they are paying so it is a good deal. My thinking on individuals: Individuals are borrowing against assets both real and paper to buy stuff (manufactured above) Paper assets (stocks) are going up at 20% per year (until it doesnt) Individuals are in the market for the long haul (until it declines) My thinking on the FED They continue to add reserves at a relatively high rate - demand for money still there. Interest rates artificially depressed by easy money policies which increases demand Events that could occur: Market crashes = interest rates will fall Market continues to go up - AG forced to raise rates and play catchup. I guess when all is said and done, I view my interest rate bet (on increasing rates before decreasing) as a hedge for my puts. Please comment thanks