Thoughts from the Frontline

The Most Unlikely Action

By John Mauldin

July 18, 2003

What in the Wide, Wide World of Sports Did Greenspan Say?
The Most Unlikely Action
Call and Raise
Are Deflation Worries a Thing of the Past?
The 6/50 Rule
Destination Paris, Next Stop Geneva

This week we look at what Greenspan really said and what he didn't say; the real reason why the bond market reacted so violently (not what the headlines would lead us to believe); what History tells us about the volatility of the bond markets and what we can expect in the future. It should make for a lively letter, as I wrap up the week early to catch a plane to Paris. Stay with me, as this letter is going to give you some real insight into the bond markets, a "secret" called the "6/50 Rule," which will help you as you ponder interest rates and your investment future. Let's jump right in.

What in the Wide, Wide World of Sports Did Greenspan Say?

Last week I compared this week's Greenspan testimony to the last card dealt in a Texas Hold'Em poker game. If Greenspan did not confirm to the bond market the substance (read bluff) of recent speeches by members of the Federal Reserve, bond traders would call the bluff and rates would jump back up. He didn't and they did.

There…

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