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“Look at the market fluctuations as your friend rather than your enemy; profit from folly
rather than participate in it”
– Warren Buffet
DIVING RATES AND DRIVING
MARKETS
From1980 to today, interest rates have been
steadily plummeting. As a matter of fact
rates have fallen 13 points over the past
30-years, dropping an average of .43 of
a point each year. A historic bull market
has been rumbling alongside this drop in
rates. The DOW rose from 857 in 1982 to
an astounding 11,722 on January 14, 2000
while the NASDAQ 189 rose to over 5,000 on
February 9, 2000.
WHAT WILL RATES DO NEXT?
History and the Interest Rate Triangle tell
us that interest rates are not only ready to
rise but must rise in order to combat our
growing debt, rising deficits and to sustain
some level of much needed economic
expansion. And there is more evidence for a
coming interest rate surge ...
• Current Rates Can No Longer Support
the Dollar
Interest rates can, in fact, become too
low to support a strong dollar which is
needed to not only hold down inflation
but and to attract the foreign capital
that we need to run the country. The US
requires at least $1,800,000,000 a day in
offshore capital just to fuel our record
trade deficit.We now have reached a
tipping point and the dollar is already
displaying weakness.
• Consider the Colossal Deficit
The stark reality of our budget deficit
is that it looks like it will remain over $1
trillion dollars for the foreseeable future. As our deficit grows, interest rates will rise to entice investor
capital over to bonds to make up this shortfall.
• Understand the Lessons of History
Interest rates have never stayed at the bottom of the Triangle for very long. Over the past 100 years,
rates have bottomed out just 3 times and the longest period was four years, from 1932-1936 or the
years of the Great Depression. In that deflationary period, gold proved to be the ultimate investment,
rising from $20 an ounce to $35 an ounce … or a solid 75 percent increase.
