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Investing/Strategies / Bonds & Fixed Income Investments
|Subject: Re: It's different this time...||Date: 6/29/2005 9:58 AM|
|Author: Lokicious||Number: 12941 of 35932|
"It would not be the first time the impact of the Baby Boom impacted
the "historic norms" in the market. There should be an increase in
demand for fixed-income investments over the coming decade(s) as
the "equity" -driven investors adjust to a greater proportion of
bonds in their portfolios."
I think it is more complicated than this. Even if boomers do downsize from stocks to fixed-income in an orderly fashion (which won't happen), over time they will also be cashing out their bonds/CDs, which will decrease the capital available in fixed-income (though it could be replaced from elsewhere). Meanwhile, and this will start in a few years, the Social Security Surplus will have peaked (c. 2009) and go away completely (c. 2017), all of which (unless they change it) is going into US bonds. Once the surplus goes to deficit, the General Fund will have to start paying back what it owes SS (unless it doesn't), and where that money is going to come from????....
For once, I'm with Greenspan on the current long term rate conundrum. Lots of attempts to explain it, now that the finance talking heads are no longer predicting rates will go up any day now. Greenie is still enough of an academic, he rejects explanations that don't hold up under analysis, and none of them does he find convincing, though personally I think it's a synergistic effect of a number of factors, exacerbated, of course, by momentum traders.
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