Whatever, huge deal, or we're all going to die?

[♪alt13]

If one believes negative yields are primarily due to demand from passive or indexed investors, then an active investment strategy should tolerate the tracking error and take the other side of the indexing herd. Alternatively, for an active investor, buying at a negative yield with guaranteed loss if held to maturity can still be a profitable strategy if the security is not held to maturity (i.e. if one is willing and able to patiently wait for the opportunity to find another “greater fool” to buy at still a higher price and a more negative yield). Recently, yield curves in Switzerland and Germany have become somewhat less negative, while yield curves in Denmark and Sweden more negative. These changes speak to a market attempting to find “equilibrium” by quickly shifting duration positioning in portfolios.

Ummmmmmmmmmmmmmmmmmmm

Y nobody talking this thing

 

[♪alt13]

https://europe.pimco.com/EN/Insights/Pages/Why-the-Bond-Market-Is-Yielding-Negative-and-What-Negative-Yields-Mean-for-You.aspx

 

[babe]

IMO, we are on the edge of a significant decline in commodity, real estate, and stock values, which will make those small negative interest returns look like a good deal.

reasons. . . . declining world population, plus a cyclical downturn, plus excess production capacity.

oil and precious metals will decline to about half present prices, other commodities taking similar declines. Stocks will decline 85%, real estate 35%. Bond prices will actually rise, meaning even with a negative interest rate, you will sell at a profit.

governments, including ours, will take austerity steps to reduce entitlements.

 

[addictionary]

It always has been like that in stock exchange. Speculators just guess the small investors' next moves from the start and manipulate them. Like chess. Act in the opposite way and sell the promise, not the real value.

 

[franklin]

Ummmmmmmmmmmmmmmmmmmm

Y nobody talking this thing

I've heard talk of this thing for a nearly a decade now.

Negative interest rates will spur investment, both from large, medium and small businesses as well as from Average Joe who needs a return on his cash hoard. That is a great thing for society.

The downside IMO is over asset price inflation. My worries are more directed at going too far left on the Keynesian Animal Spirits spectrum. We are pushing the bar plenty. Side note to that, I'm not certain the stock market will perform as it has historically as everyone needs retirement return. I'm not worrying too much about that one for probably another decade but it is in the back of my mind.

 

[leftyjace]

Supply and demand... Yep.

I'm not sure about babe's doom and gloom report... the world population is not shrinking. Worst case scenarios is a lot of tragedies and world upheaval that would cause world population to start declining, but that would take decades. Keep in mind that Africa still has a lot of growing to do. AND Africa has the most untapped natural resources on the planet.

But ya... corrections will happen. I don't know about an 85% reduction in stock prices, but things will definitely shift as the baby boomers retire and start trying to sell off their stock so they can live. Again... supply and demand. That will create a larger supply, which will reduce prices.

MAN, I love Economics. Best thing I ever did was switch my major.