Why weren’t Japanese investors buying 30-year bonds for the last 10 years?
A. Interest rates have been low in Japan for an extremely long time but we gave them a booming stock market to invest in rather than our bonds. Remember, when the market was really moving in ‘98 to 2000 everybody considered that a guaranteed return like a bond. Q. So if that’s the case then they should be investing in the stock market now with the Dow poised to make record highs. Why are they still buying 30 years instead of investing in our stock market? A. First of all because of human psychology; the market crash is still fresh in their minds. The other more technical reason is because in the late nineties and in early 2000 there were a lot more active traders. Volume in the market was coming from a large number of individuals. Since the crash, it’s now gone to computerized volume trading. One of the biggest complaints from floor brokers right now is the actual lack of volume, meaning active in and out trading versus this computerized directional volume. Even though we see volume to
