I like Marcus Aurelius’ Mark Twain quote: “I am more concerned about the return OF my money than the return ON my money”. I”ll quote Shakespeare though I know he never said it: “Tis the quiet before the storm. Methinks I smell some deflation upon the still air…”

The thing I don’t like about the “oh look at the billions flowing” cries is that they kind of assume a sensible and balanced portfolio to start. Or they assume a high muni bond exposure at the end.

How many of these folks started at 100% equities and are still at 90% equities? If they just switched new 401k contributions to the munis, it’s possible

2. “Why would you say this – “appears to be a 30/30 cycle”?”

My statement came from using 109 years of data, source Ed Easterling, Crestmont Research. Your source?

Correction – my source was the online data from Prof. Robert Shiller, which has now been updated going back to 1870. Easterling (Crestmont) is another source and uses Shiller’s published data and others on his website.

I sometimes loos track of where I get things and what I analyzed when.

1. “Municipals do not go bankrupt. (Very very rarely). And its a classic case of something at its bottom. Tax recipts [sic] tend to recover dramatically in recovery, but they lag. Why is this not saavy [sic] investing?”

You are correct, but there are defaults on municipal bonds that have little to do with bankruptcy. The rates of default are typically low by comparison to corporate bonds. However, according to a series of studies by Fitch Ratings (1999, 2003, 2007), ‘municipal default rates do go up moderately during recessions, particularly in the year after the economy bottoms out.” So if I understand your premise, you believe buying unrated or below investment-grade muni’s, as we come into a period that historically sees higher rates of defaults on muni’s, to be a reasonable investment practice?

2. “Why would you say this – “appears to be a 30/30 cycle”?”

My statement came from using 109 years of data, source Ed Easterling, Crestmont Research. Your source?

Why would you say this – “appears to be a 30/30 cycle”?

Going back 300 years do you see 10 cycles? Going back 150 years do you see 5 cycles? We see 1, maybe 2 moves that look like that. Its like seeing something in the clouds… or “Jesus” in a piece of toast and then buying it on Ebay.

Moronic.

Historically there appears to be an interest rate cycle that last ~ 60 years ( 30 up / 30 down +/-). It would appear that we are at/near the bottom of that cycle and should be looking for ~ 30 years of increasing interest rates (with normal ups and down overlaid on the broad trend). Does that factor into your analysis at all, that is beyond the normal recovery move?