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There was a n interview of PIMCO chief this week end in our papers. They are
in the BIG league and belong to those making the flows that really move the
markets. Essentially he says, the funds rule the world today, because they
make or break the markets, economies by moving their funds. Hence
governments are now forced to comply to strict management. He expected
- G to raise rates twice 25bp this year, once in Feb (Rise is overdue, so he
said).
- long term US rates to rise a bit further maybe till 7% at most where they
would step in and buy (that means something)
- 10 year Euro rates to rise till 5,5% at most where they would step in and
buy (that means something)
- equity markets are very expensive but will remain so for another 2/3 years
until we see the first retirements flows reverse...
- european and japanese markets are at the begining of their growth cycle.
- inflation at 3% in US and 2% in Europe
- no crash, institutions will buy each dip...
FWIW
Gwenn
Dennis Holverstott wrote:
> > If 70 to 85 % of the stock owners in the country NEVER SELL, because
> > they are holding for the long term, according to how they have been
> > trained, isn't this shrinking the pool of assets
> > available for purchase thus driving prices up?
>
> Yup, that plays into the demographics model and is why I give the bull a
> few more years. Most people have their stocks in retirement accounts and
> they have been conditioned to just buy more on dips.
>
> The whole thing could get ugly though as the boomers approach retirement
> age. We saw what happened the first two days this year when a lot of
> people, for tax reasons, put off taking profits in their taxable
> accounts until after the year end. Imagine the whole boomer generation
> dumping the stocks in their tax-free accounts with no worries about
> paying taxes on the profits. The smart ones would get out quick and the
> others would hang in there and get whacked hard. The whole psychology of
> the market could change from buy the dips to sell the rallies as the
> retiring boomers start to consider security more important than growth.
>
> --
> Dennis
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