may18

**azanon** · 05-18-2004, 03:04 PM

I'm with Tom, its time for stocks to really kick it.

I just got through reading an old book written by Charles Givens, who was one of those Investment/real estate guru's in the 90s. One of his littly catchy sayings in that book was "When interest rates are low, stocks will grow". Mr. Givens seemed convinced that the prime interest rate, and its current direction had a very significant effect (80% or more) on determining the earnings potential of stocks, bonds, and money market instrunments.

Givens actually died in the late 90s i believe. I bet he'd salivate at the idea of the prime rate now being 4.0%, having fell from a much higher rate, and having the stock market discounted as much as it is from its highs.

Having just read MSNs update this morning, we are hearing continued talk about the Federal Reserve about to raise interest rates. When that happens guys, bonds are going to become a poor investment option. (for every 1% rise in interest rates, bonds fall ~ 10%). With interest rates as low as they are now, money market instrunments and the like arealready poor options, serving a defensive position only. The real estate market is also at a pinnacle (IMHO). This will leave the only decent investment option as stocks and i think we'll see money being funnelled into the market very shortly which will naturally cause stock prices to rise.

Stocks are the way to go now. I'm with Tom, and if you like making money, I think that's the place to be now.

Azanon

**JerBer** · 05-18-2004, 04:11 PM

Sounds encouraging Azanon! Welcome to the board.

JerBer

**tsptalk** · 05-18-2004, 07:45 PM

It's nice to see this rally hold. After today's close, Hewlett-Packard reports earnings. It could determined tomorrow's direction.

**tsptalk** · 05-18-2004, 08:12 PM

Wow, the volume was very low today,1.4 billion on Nasdaq and 1.3 on NYSE. That's not a great sign. Not too many were willing to participate in today's modest rally. I guess it's not hard to imagine that investors are quite timid about jumping in. We really need to see some follow through with more volume tomorrow.

**tsptalk** · 05-18-2004, 08:17 PM

Hewlett-Packard (HPQ:NYSE - news - research) delivered a slight upside surprise on revenues in its second quarter after the close Tuesday, while earnings came in line with Wall Street estimates. Of greater immediate interest to Wall Street, the company also issued a new revenue outlook that suggests it could see an extra $1 billion in revenue in the second half of 2004, if business goes well.

**thinks** · 05-18-2004, 08:24 PM

Sounds like it shouldn't scare off anything tomorrow then. Hoping for a good rest of the week. Been in and continue to be in.

**azanon** · 05-18-2004, 09:58 PM

Well, let me qualify my prediction above.... I'll have to admit at this stage, i'm more of a "mid-term" investor, preferring to reanalize the current market on about a monthly basis, and updating my "yearly" prediction. So i'm neither a day-trader, nor a "buy-and-hold" investor.

So i'm basically saying what you're saying in your mid-term prediction; that i believe stocks will post a strong return from today to a year from now. So, dont say i'm wrong if we take a week or two more lashing cause folks are hesitant to buy this very moment. Its coming.... soon, if not now.

**Mr. Duke** · 05-18-2004, 11:33 PM

azanon wrote:

Having just read MSNs update this morning, we are hearing continued talk about the Federal Reserve about to raise interest rates. When that happens guys, bonds are going to become a poor investment option. (for every 1% rise in interest rates, bonds fall ~ 10%).

Azanon

Bonds are a poor investment if you're looking to make money....Most of us here use it as a safe haven.....I'm still positive for this month......how about you??????Full capital ready to go back to work.....

still G....looking to move back in on the next negative swing.

**azanon** · 05-19-2004, 02:46 AM

Bonds are a poor investment if you're looking to make money....Most of us here use it as a safe haven.....

I'd reconsider that line of thinking. Looking at 2000-2002, our "conservative" bond fund, the F fund, averaged over 10% during those years. A 10%+ return on your money, is definitely a step up from a "safe haven".

Looking at history, our F fund made 18.3% in 95'. Also FYI, bonds averaged about 20% from 1984-1986, and US Bonds made 39%!! in 1982. Foreign Bonds (developed countries no less) averaged 35% return in 1984-1986! In short, its hard to beat a bond when the prime rate is high AND falling, because when that happens you earn two profits from bonds - interest and appreciation.

I also disagree with the idea that bonds are a safe haven. When the prime raterise 1%, bonds depreciate 10%. When that happens, your principal may be decreasing faster than you are earning interest. Your interest may be guaranteed, but your principal is not.

The fund that fits the decription you listed above is the G fund. Its a safe haven, and a great place to not make any money. Granted, if you ask me, there's not much "safety" in watching your retirement account not being able to keep up with inflation.

.....

Yes, i hopewe can have fun on the stocktrain :-)))))