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Author: imcharliehm Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35400  
Subject: Re: Where are rates going? Date: 8/18/2001 12:11 PM
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jrr7,

Is your pronouncement that "Anyone... will be wrong more than half the time" the product of extensive research and scholarship, or merely a bit of divine inspiration that you feel compelled to share?

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.

No one claims interest rates are easy to predict and a lot of smart traders/investors don't even attempt, prefering merely to react to what the market is doing rather than guess what it will (or should) be doing. But that doesn't obviate the need to make plans and decisions, which I'm assuming was the intent of the original question, to which your second sentence was a very astute reply, and might be translated this way:

Map out what you see are the likely events and plan your investments accordingly. If you're wrong, as you're going to be a good portion of the time, then make the necessary corrections. The goal isn't to be right, but to make money. It's how you handle mistakes and losses that determines whether you survive long enough to eventually learn enough to be able to win more than you risk.

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. And when the Fed starts raising again, as they eventually will, then will be the time to lengthen maturities and make massive commitments. For now, stay tentative and flexible.

Charlie
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