um, i would not be in a rush to buy based upon a level of any number at the moment. Why? the bond market rates are telling us that something is happening of which we do not know, but will know sometime in the future. The interest rates on treasury bills and notes and bonds are the lowest since the depression, and that was a long time ago and through a lot of ups and downs. It is true that the treasury is managing the supply to keep the interest rates low, and that the current environment is that the world can buy treasuries, which are a lot more customers than just the us domestic population, which distorts the demand to supply relationship of the past.
The interest rate on the 10 year note is below one percent, about 0.78% which means that if you have $1M dollars and bought 10 year us government bonds, you would get $7,800 a year in interest for the next ten years. and in 10 years, that will be $5,600 of buying power in todays world after inflation.
What this means is that smart investors are pricing in a credit event, similar to 2007, somewhere, and the two most likely places are the oil industry, and the hospitality industry. The oil industry due to the actions of Saudi Arabia late last week, driving down prices and increasing supply being ****ed at Russia for not participating in the opec supply cut, and the probability of bankruptcies in high debt , marginal cash low hospitality companies, large and small, primarily in the corporate debt market.
So just like buffet sat on his hand for two years and did nothing in the early 70s, until the valuations were ridiculous cheap, now is not the time to try to catch a falling knife, as the future shape of the economic recovery may be an L versus a V. Hence my not owning much equities and waiting for a large devaluation before buying again.
YMMV
sportsguy
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