The Minutes Of The May 19th Bank Of Japan Meeting Mentioning Inflation As A Risk Concern Caused A Sell Off Of Utility Stocks
Sunday, 17. August 2008, 23:28:32
The minutes of the May 19th Bank of Japan meeting published by news services such as CEP News on Action Forex.com and other news sites, beginning in the third week of June 2008, mentioning inflation as an investment risk concern, caused disinvestment from the BRICS, EEB, and the Utility Stocks, VPU.
The chart of tip,vpu,tlt,bttrx,upw,eeb shows EEB and VPU took a tumble June 23, 2008.
Rising inflation is stimulating risk aversion to stock investing world wide: stocks outide of the US, EFA, have been falling; while US Stocks, VTI, have been rallying on a rising dollar.
Concern over rising inflation is seen in the fall of value of the inflation protected TIPS bond ETF, TIP, relative to TLT ... TIP:TLT
The MSN.com chart of TLT vs. TIP for the period of June 23, 2008 to August 15, 2008 shows the effect of the Dollar Rally, and also of inflation: The Dollar Rally has pulled the medium term US Treasury bonds 3% higher, while concerns over inflation, have been trying to pull TIP down; they registered 0% gain or loss for the period.
During inflationary times, investors go to gold. Yes wealth is best preserved by investing in gold.
I really feel sorry for the fixed income investor, the retired living on utility stocks; the dividend income stream is going to be greatly reduced, as the investment base of stock value continually falls lower, in fact the income stream is going to be "terribly reduced", because we are entering Kondratieff Winter.
The bottom line here is that the utility stocks are leadig the way down into 'The Abyss'.
The chart of tip,vpu,tlt,bttrx,upw,eeb shows EEB and VPU took a tumble June 23, 2008.
Rising inflation is stimulating risk aversion to stock investing world wide: stocks outide of the US, EFA, have been falling; while US Stocks, VTI, have been rallying on a rising dollar.
Concern over rising inflation is seen in the fall of value of the inflation protected TIPS bond ETF, TIP, relative to TLT ... TIP:TLT
The MSN.com chart of TLT vs. TIP for the period of June 23, 2008 to August 15, 2008 shows the effect of the Dollar Rally, and also of inflation: The Dollar Rally has pulled the medium term US Treasury bonds 3% higher, while concerns over inflation, have been trying to pull TIP down; they registered 0% gain or loss for the period.
During inflationary times, investors go to gold. Yes wealth is best preserved by investing in gold.
I really feel sorry for the fixed income investor, the retired living on utility stocks; the dividend income stream is going to be greatly reduced, as the investment base of stock value continually falls lower, in fact the income stream is going to be "terribly reduced", because we are entering Kondratieff Winter.
The bottom line here is that the utility stocks are leadig the way down into 'The Abyss'.
WIDGETIZE