Again, "Prediction is very difficult, especially about the future".bedraggled wrote: Thanks, Rickb,
I have been a deflationist since 1982 and rates are playing out as I thought and with room to drop significantly. Lately, though, things seem weird, at least to me, and I wonder what the future looks like just beyond the near term. With China and Russia creating that bank thing in Asia, will that toss a wrench into the machine?
Thoughts, please.
Current prices for all assets (not just long term bonds) reflect the entire market's consensus. If it was clear that any asset would inevitably go in the toilet tomorrow, it would already be in the toilet today. If it was clear any asset would inevitably go to the moon tomorrow, it would already be close to the moon today. The market is occasionally wrong and large "corrections" (mostly down) do happen, but even if you can determine a correction must come (meaning the market consensus is wrong) there's no good way to predict when it will happen. If stocks are in a bubble and "everyone" knows it, stocks still might double before a correction happens (if everyone actually knew it, the correction would have happened already).
The genius of Browne's PP is that you don't have to do any predictions. 25% of your assets are in stocks, whether pundits are saying stocks are currently high or low - and wherever they are today there's no way to tell whether they'll go higher or lower tomorrow. 25% of your assets are in long term bonds, again regardless of whether anyone says they're currently high or low (and again, there's no way to tell which way they'll go tomorrow). Similarly gold. You can spend every waking moment trying to outguess the market, but my guess is you won't. Stop trying.
"Use the Force, Luke. Let go." - Obi-Wan Kenobi