Thu 27 Jul 2006
With all the talk around about “If stock are down, go bonds”, I suggest that a savy investor might want to first calculate the probability of stagflation occuring (rising inflation combined with economic slowdown like in the ’70s).? If we hit something like that, the both stocks and bonds go down.? I’d appreciate any input into this concept as I could be missing something but I don’t want to see any body jumping out of the pan into the fire without considering the possibility.
July 28th, 2006 at 12:05 am
You read my mind, and potentially predicted the next post I was writing…
I personally think bonds are a bad bet. They may see a brief rally (3-6 month timeframe) but you’re better off holding cash, CDs, or a stable value fund.
It’s a factor of rising inflation, a deteriorating fiat money system, exhorbitant fiscal deficit spending, and a few other things I can’t remember off the top of my head.
See my next post for more…
July 28th, 2006 at 11:39 pm
I think bonds are poised for a nice little rally. That’s why I’m boosting my bond position in the short term since I think this bond rally will occur with or without a stock downturn (if stocks do dip downwards significantly, this likely will help bonds).
More on this later when I’m not so tired. I’m trying to catch up on my posts, but I’m way way behind.