Quote:
Originally Posted by daepp
Tabs - if investors loose their appetite for debt as rates rise and bond values drop, won't they shift to equities?
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What Tabs is referring to is that the market price for existing bonds would tank. Bonds have a value that varies depending on the interest they pay and the amount they represent. If interest rates rise, people looking for security will buy new bond that pay a higher interest rate. Old bonds would be considered a negative investment.
Shift to equities in a volatile market? Damn risky for old folks like me. When young with time to ride out a market downturn that could last a decade or more is risk tolerant. When in your mid 70's with a heart condition? Well, you shouldn't be as tolerant of risk. Preservation of capital takes on more importance than potential gains (or sudden loss) through equities.
Yep, the market has done extremely well since Trump's election. But those of us who look at P/E ratios and other factors wonder how long the bull will last...