A common scenario is that money flows out of a falling stock market into the bond market, which drives up the price of bonds and therefore lowers interest rates.  Of course, lower interest rates usually strengthen the economy, which is good for stocks and causes money to flow back into the stock market.

Faithful readers know my love-hate perspective on Goldman Sachs, the venerable Wall Street Goliath.  I love their research and hate everything else about them.

A few weeks ago, they recommended investors decrease their stock holdings.  A few days ago, they warned of a “baby bond bust” in the second half of next year.  I read that as a suggestion to investors that they  should lighten up on stocks now and hid in bonds until next summer when it is safe to return to stocks.  That is quite reasonable.

This is an example of useful research.  I won’t mention their sales practices.