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Investing/Strategies / Bonds & Fixed Income Investments
|Subject: Re: Where are rates going?||Date: 8/18/2001 12:45 PM|
|Author: foobar73||Number: 1973 of 36040|
Think about what you are saying. If such a claim were true, then "anyone" would merely have to make a prediction and do the opposite to have a viable trading system for trading interest rates.
In the polls and such I've seen, usually the allowed predictions are "higher", "lower" and "stable", with "stable" meaning within certain limits from the current rates. So, assuming the actual results are evenly distributed, sheer guesswork should only win 1/3 of the time. The three-tier system boots out the possibility of simply switching your choice.
I'd seen one case where "experts" had a 22% success rate, for a one-year prediction.
But, since you asked, I'll hazard a guess as to the direction of interest rates. Lower then flat then higher then flat then lower, as the intermediate cycle repeats itself again, as it will.
"Lower then flat" is pretty obvious. Near-term interest rate picking is relatively easy, since there are a lot of known factors. This is similar to weather: 5-day forecasts can be remarkably accurate, but trying to predict a few months out is basically futile. Of course, for bond investing, near-term forecasts aren't very useful, as most of your relative performance will be based on what happens much farther down the line.
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