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People say this, but I didn't consider it worthy of being mentioned as a serious reason. You can invest in stocks or commodities or real estate or these days cr
by dmurray 6y ago
People say this, but I didn't consider it worthy of being mentioned as a serious reason. You can invest in stocks or commodities or real estate or these days cryptocurrencies. They all have great historic returns but some people and some institutions instead lend their billions to the world's governments at such low prices. You can't say with a straight face that there are no other plausible investments.
You could tell the opposite story: bonds continue to be popular and pricy because the world fears instability: that any other asset class may be in a bubble and about to lose all its value. But even then, investors are saying that though companies and industries may rise and fall, the countries will survive and pay their debts.
- notfromhere 6y agoThey’re talking about the institutional market. If you are a big holder of money, you basically have no place to park it other than bonds.
- mannerheim 6y agoAre they saying the countries will pay their debts, or are they saying that they know that they can turn around and sell their bonds to the Fed whenever they want?
- nradov 6y agoNo everyone knows the high yield Argentinian debt is trash. The investment managers and traders buying it today think they're smart enough to offload it to some sucker before the next default. Or they expect to move on to another job before that and just don't care about what happens long term.
- mannerheim 6y agoWell, in either case, the valuations are based on the expectation that they can sell the bonds to somebody else, rather than the expectation that they will collect on the debt.