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Author: hackshark Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35378  
Subject: Re: Forecasting the Fed's Next Move Date: 5/30/2002 10:41 AM
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And I'm going to use common sense to predict what the Fed will do in June. Nothing.


Excellent point. People were saying 6 months ago that we already would have seen the first rate hikes, and as I recall, the Fed funds futures were concurring with that. And it didn't happen.

I have said on other boards for 6 months now that the next fed move is more likely to be a rate cut than a rate hike. As we all know the fed hasn't moved, and so I haven't yet been proven wrong.

My opinion is that we are going to have a protracted period of poor econmoic performance. We just had the biggest expansion in recent US history, why would we expect this to be followed by the shortest recession in recent US history? If I were writing the script, that just isn't how it would read. If I were to guess, I'd say it would take a long and deep contraction to correct some of the excesses of the past expansion. So far, this has been substantiated by the worst profits contraction in my lifetime.

If we are on the cusp of a prolonged deflationary period, a la Japan, then long term bonds could be one of the best investments available, and there is no one out there pounding the table to buy them. A contrarian's delight. I'm not saying bet the ranch on it. I'm just saying this is why diversification across maturities might make sense.

-hack
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