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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

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The Other Great Rotation

FYI: (Click On Article At The Top Of Google Link)
Defying predictions, investors are still exiting stocks and moving into bonds–but there's a lot more going on here than that.


  • Interesting -- I guess another reason to stay overweight equities for now.
  • I just get a google search page.
  • Click on the first link on google page and it will take you to article
  • The page I get has no links.
  • That worked. Thanks for that. I had gone over to Barron's but the article was not listed.

    Internet gremlins I think.
  • "The Federal Reserve has spent five years buying Treasury bonds in an effort to keep yields throughout the bond market low enough to encourage investors to loosen their white-knuckled grip on these "safe" investments and move into stocks

    I question the above statement, which is the opening statement of the article.
    Can they prove that statement to be true?

    It says the Fed has kept bond yields low IN ORDER TO encourage investors to buy stocks.

    Is that so?

    I thought the Fed has done this to increase the money supply. To lower the cost of capital. To encourage borrowing and spending, to stimulate the economy, to facilitate the recovery of home buying and the real estate market.

    I don't see the Fed sitting down and having planned a method for investors to move into stocks.

    OK, I can play devil's advocate and say the Fed wanted this to happen, because when people's stock portfolios are higher in value, they feel more confident to spend money and stimulate the economy. But I don't think this was the primary intent. I think the primary intent was to stimulate the economy by lowering the cost of capital, the cost of borrowing money, by increasing the money supply. Not to raise stock prices.

    MFOers, please opine......
  • Rjb112, I think you are correct. I don't believe the Fed is attempting some sort of financial social engineering here. If that were the case, then would the opposite hold true as the Fed slowly raises rates?

    The Fed wanted to stimulate the economy which they did, albeit slower than most wanted it, and the rush into the stock market was secondary.

    I'm not sure what the writer was trying to achieve here.
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