Quote:
Originally posted by Monk@Apr 18 2004, 10:27 AM
A. maybe instead of the population age affecting interest rates... it is the interest rates affecting the population. Does it matter? Maybe not.. but if it is this way then we will see interest rates turn before average age turns.
B. I think you need a much longer time frame than 25 years as financial markets are thought by many to go in 20-ish year cycles.
C. If they ARE tied together inversely, what if we are at a top of the average age cycle? If it starts going down today... won't interest rates go up?
D. Was there a huge drop in the average age when interest rates skyrocketd in the 70's / early 80's? If not, then this tool can not be used with any certainty to predict interest rates.
E. Maybe they just happen to be 2 trends going in opposite directions and there is no connection at all? Maybe the average temperature for the last 25 years could be plotted inversely against interest rates too?
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Monk,
plot into your questions the baby boom effect and all will fall in it's place.
there is a certain delay between age/interest rates, as new borns do not invest, it takes them time to acumulate wealth to invest.
your questions seem to confirm my THEORY,
and so are cj's.
the KEY thing is:
when TREND is established,
the tail follows the head and cj's numbers eem to confirm that as well.
I am NOT claiming to be 100% right or take in conciderations all the factors, but....
I am ONLY interested in the whole thing from perspective of which maturities overweight in the porfolios and I'll be putting big chunks in longer maturitis vs short maturities which might NOT find interest rates better at re-investment times....
I also found interesting correlation:
the HIGHER the credit rating of the securities in the bunch,
the more they appreciated in price,
even though they pay less dividends than closer to junk bonds