Morn'in Coffee (but not enough apparently),
I read this article last night and find the link posted this morning.
http://www.investmentnews.com/article/20120411/FREE/120419981?template=printartThis article reads like a long term wave theory. How is one supposed to know or think interest rates will rise and remain in place for 20-30 years (although I won't be on this rock to observe by then)?
Currently, I understand a few items that affect interest rates:
--- central bank policies
--- demand by whomever, relative to supply of whatever bond type
--- need to offer/issue bonds by others, versus central banks
--- desire to own or "not" own some bonds due to risk circumstances; i.e., there are those who will currently buy Spain's or Italy's bonds, but the current demand versus the risk is gonna cost the issuers in the form of yield required for buyers to hold the perceived risk.
--- higher interest rates because of a stronger business cycle and private sector borrowing drives the "cost" of borrowed money
Is there some cosmic event that causes such a "wave" theory to be in place for a long and sustained interest rate environment?
Headwinds I still perceive:
--- demographics (aging populations in developed economies), although some of the so-called BRIC's and other countries do have younger populations.
--- continued slower growth in somce sectors; although I find it difficult to project spending habits going forward
--- technology will continue to affect the number of workers required in many industries.
--- If interest rates rise too fast or too much, the debt of the U.S., Japan, England and much of the Euro area will become even more under water...to the danger zone.
In the end, there will be a cycle time with and from which there will be buyers and holders of bonds, as lower yield bonds continue to be replaced by higher yielding bonds.
Note: I am not qualified by any degree work or certified tests to indicate that I have any skill sets in analyzing complex numbers and moving any results into forward years for projections.
Well, there is more; but away I have to be.
Your thoughts are welcomed.
Regards,
Catch
Comments
Guess that wording just about covers it, eh?
Not directly related; but I sometimes wonder whether I could use my time better for other things.
Perhaps to create our own Permanent Portfolio with a mix of 50/50 bonds and equities among 10 well researched etf and active funds to also obtain the lowest average expense ratio. Then set it and forget it.
Ahh ! The real bugger for me. I would not likely keep my hands off.
It may be part of my own nature; and modified with growing up and living in Michigan. I know I need to be sure the snowblower is properly maintained and running well before the first big snow flies. The same applies to the lawn mower, which is now ready for a first lawn cut any day now. I also know I have "x" numbers of suitable days for outside painting and similar work; which means the inside chores similar in nature lend themselves more to the cold weather months.
Oh, the complex nature of we humans.
Take care of yourselves,
Catch
Just finished the first lawn cut of the year up at the river house last weekend. Here we go again...
adjective
having or showing no skill; clumsy; weakened; compromised; bought-off: the inept handling of the threat.