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| Mouth-Off Main PageIn 1987 when stocks crashed, Bonds shot up. In 1992 when the Bond market had one its worst years in its history, stocks were generally up or even. Falling Bonds may not be great for the stock market, but weak bonds do not necessarily mean weak stocks.
Looking ahead we can expect very weak bonds with a strong or steady stock market. Most bonds are pegged to US treasury bonds, and the US government has enormous debt that continues to grow rapidly with no plan to reduce it. Small symbolic attempts to improve the US government’s financial situation resulted in a complete shutdown of the system. Loaning money to an organization that burns money as fast as it can print it is extremely risky by any measure. US GOV BONDS ARE RISKY.
US companies on the other hand have been making money and are positioned for further growth. Unlike the US government, most US companies have already gone through their painful restructuring. As governments around the world shrink and go bankrupt, private companies will be there to take over many new responsibilities. It is unlikely that stocks will continue their boom unabated, but since US companies are strong and well managed, they are a far safer investment than the bankrupt US government.
Who would you rather give your money to? A bankrupt politician with no experience downsizing bureaucracies or a wealthy businessperson running a growing business with a history of a positive cash flow? BONDS WILL FALL WHILE STOCKS RISE OR HOLD STEADY.
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