Is the bubble in bond funds?

[blazespinnaker]

http://noir.bloomberg.com/apps/news?...KGZlH.Ec&pos=6

The amount of money flowing into bond funds is poised to exceed the cash that went into stock funds during the Internet bubble, stoking concern fixed-income markets are headed for a fall.

I assume I'll get a resounding 'YES' here.

You know, I think instead of calling them asset bubbles, we should call them "asset dams" because when they burst, all that money has to go somewhere.

This is why we have these serial bubbles .. because all this money is in the system and each time it bursts, the money has to go somewhere else.

[flintlock]

Re: Is the bubble in bond funds?

The question is, where does it go next?

[dummass]

Re: Is the bubble in bond funds?

The question is, where does it go next?

Give me a ... G
give me an... O
give me a ... L
give me a ... D

[charliebrown]

Re: Is the bubble in bond funds?

This is true to an extent if there is an orderly decline. I have wondered the same thing about the flow of all of this liquidity. I also agree that PM's will get a boost. All the other things have been tried. Stocks, then houses, now bonds, we are working our way down that inverted pyramid.

However, suppose today a bond is trading at par of $100. overnight new information comes out that fort knox really is emptly, China does the nuclear option etc, and the next morning the bid on bonds is $90. $10 of money is now gone. I cannot flow into anything.

[Rajiv]

Re: Is the bubble in bond funds?

However, suppose today a bond is trading at par of $100. overnight new information comes out that fort knox really is emptly, China does the nuclear option etc, and the next morning the bid on bonds is $90. $10 of money is now gone. I cannot flow into anything.

- slow deleveraging is taking place -- accumulated wealth is slowly being destroyed -- it was all paper anyway -- based on fictitious "mark to market" valuations.

[LargoWinch]

Re: Is the bubble in bond funds?

Give me a ... G
give me an... O
give me a ... L
give me a ... D

[LargoWinch]

Re: Is the bubble in bond funds?

- slow deleveraging is taking place -- accumulated wealth is slowly being destroyed -- it was all paper anyway -- based on fictitious "mark to market" valuations.

Metalman call this process "rust".

That reminds me, where are thou MM?

[blazespinnaker]

Re: Is the bubble in bond funds?

except the government just leverages up as everything else deleverages. and vice versa.

I think the idea is that when the money dam bursts, the fed is standing by with lots of paper towels to 'soak' up the destructive flood.

of course, the argument here is that the fed can't / shouldn't / etc.

[flintlock]

Re: Is the bubble in bond funds?

Gold? How come I've never heard about that on this forum before?

I'm about 40% gold now. May be upping that soon.

[Jim Nickerson]

Re: Is the bubble in bond funds?

AND THE QUOTE OF THE DAY GOES TO … This is from David Rosenberg's daily pdf dated 8/25/2010
John Roque at New York-based WJB Capital. This is a real beauty:
“We don’t believe there is any “bond bubble”. However, there is a bubble in people believing there is a “bond bubble”. Here’s how you will know if there is a bond bubble — ask your colleagues how many of them own bonds in their personal accounts. When nobody/almost nobody raises their hand you should be comforted in knowing that the prospects of the existence of a “bond bubble” have been reduced. By the way, this tactic has worked wonderfully for gold over the last decade.”