Bonds are Bombs

We heard this expression this week....Bonds are Bombs...it stood out because everyone keeps wanting to buy bonds. Yet after today we will have the first two up days in a row in two months for equities....and no body is talking about the stocks they should have been buying over the past three weeks. The first part of an up move is always as a percentage the highest.....so now more people will chase this market... but only after it rises another ten percent.

The problem with debt is that it is backed with more debt.....so investors need to move on from leverage and focus on cash flow outside of debt. This is where more money will be made and not lost over the next year.....why invest in work outs especially in a new reflationary cycle. Remember everyone is focused on deflation....investors will chase assets aggressively once the tide changes and it will.....we have exhausted the deflationary cycle that started more than 20 years ago...this is key to investing today...to look forward....interest rates are going higher not lower.

The best golfer in the world said recently when asked about his injury to his knee and surgery...is this a crisis time for you? "No, no," he said, "I expect to come back maybe fitter, stronger, healthier." He added: "I remember when I got engaged, people said my game was over. Then I had a baby, and that came up again. All those things make your life better. I'm not going to lay down for anybody." America is in a similar situation.....the new majority expecting to govern shorty talk about change...we'll see...but everyone outside Washington will be the people that make the USA better after the recent fiasco.

The bears (vultures) are still saying, "When restructurings begin in earnest next year, the process will not be orderly, the pace and scale of the restructuring requirement will overwhelm the available capacity to address it- both in terms of intellectual and financial capital." We agree. Most big banks and private equity just want to close the books for 2008 and move on. So much is being put off or deferred until next year to see what the economy looks like.....and under what leadership and tax policy.......the new crowd better be careful.....

We will avoid work outs and leave that to the vultures.

Danny Boy seen here enjoying a fine autumn afternoon.....after a bath..he was sprayed by a skunk the other night. He too is happy October is finally over.