The average > investor would be far better off if they did think that enormous returns > could continue forever because, in a deep though less dramatic way, they > DO. I suspect that a lot of people have been turned off to stock > ownership for decades in spite of the fact that they are the smart > long-term bet. > --
People aren't always alive in the long-term! Lots of baby boomers are approaching retirement when they will begin to draw down their savings. If their savings are being decimated by a bear market at the same time, they may not have enough to last them until they die. For people who have already accumulated a nest egg and may not be young enough to start over, capital preservation is rule number one. So it may be a wise precaution for these people to move their wealth into save havens, mainly bonds. In a few years, this movement of baby boomer money into safe havens should drive down both the price of stocks and the yield on bonds. ~Alypius Skinner
