Replies to post #102121 on Biotech Values

[linhdtu]

Well, the answer to the issue you raised is also implied in the question you pose.

If a person is to invest in bonds, don't do it through mutual funds.It is actually not that hard to buy it directly and the mkt in Treasury issues is quite/very liquid.

On the other hand, apparently the common "investor" as you would imagine him probably will also be a firm believer in the EMH as he does seem to ascribe all sorts of information implicit in the daily variations of the stock price.

[linhdtu]

When I think of the dot com bubble which is a true bubble, any investor in it would come out with a loss of say 80%, 90% or even 100%.

Compare to that sort of loss magnitude, a hair cut of 5%, 10% from a bond fund would be great in comparison.

Beside if I don't want to rush out the door along with the other guys and sit tight, the loss I would I incur from a bond fund run would be small if I stay until maturity.

[bladerunner1717]

This is true, Dew. Furthermore, very few investors hold the bonds to maturity, so the premise of the author's argument doesn't hold.

Furthermore, as a number of commentaries--I read over a hundred of them--on the article point out, the bond market has recently become the playground of hedge funds and speculators, so a "bubble mentality" is building in the sector as well.

What did Buffet say? "Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful."

Nonetheless, having said that, I expect September/October to be difficult months for the stock market, as Rosenberg's predictions of downward revisions of GDP and growth in unemployment may come true.



Bladerunner

[jbog]

Dew / Bonds

In regards to the 'Bond Bubble', I listened to a WSJ report from Strategas Research that basically laid out the argument that the Fed is in more of a predicament than Bear Sterns was before it went under.


As of right now, the latest figures showed that 31.7% of our Sovereign Debt is due in less than 12 months, 30.5% is due in 1-3 years, 20.7% is due in 4-7 years, 7.4% is due in 8-10 years and 9.8% in due in 10+ years. This is almost opposite of what the UK or our Corporations that are stretching their Bonds out (Norfolk Southern just issued 100 year bonds) while our Government is in short term because they don't want the hit on our deficit.

If you think about a bond bubble explosion, we still have to renew 31.7% ( less than 1 year) of our debt as people are running to the exits.

It would be nice to be the ink salesman.