[quote=Jazzman]I’m confused about which bubble we’re talking; the bond bubble, or as someone termed it RE bubble II? Notwithstanding the recent comments about the postponements of tapering, I don’t know why anyone would still be in bonds, given the clear market signal in June of this year. Fixed income seekers were pushed into them, and again got their fingers burnt. Rotating out of them is fictional. Nobody talks about the silent minority, presumably because they are judged to be better able to cope. It’s now been six years since the bubble burst and the Great Recession. What have we got to show for it, and what are the lessons learnt? Nothing but more bubbles? I see no real signs for hope, just a diminishing pool of alternatives. It is not so much a transfer of wealth as a black hole.[/quote]
The bond bubble predates the most recent RE bubble by more than 2 decades. It started in 1981. It “burst” in ’83, only to resume and recover more than it lost until it burst again in ’86, only to resume and recover more than it lost, with that pattern repeating itself no less than 6 times over the last 30 years, most recently in 2008 and again in 2010. Yields are still lower than any other time in the last 30, save for a few days in 2010 and a few months in 2008. The market signals actually began about 15 months ago, but it’s hard to fault anyone for not believing them. Those signals have deceived before more than a half dozen times over the last 30 years. I know of a guy who has bet and lost 10’s of millions over the last 5 years that bond bull market was over. Is this really when it’s going to happen? I dunno. Maybe.
