The Money Blog

Public to Private

May 02, 2025

Historically, when the stock market is in trouble, capital shifts from stocks to government bonds, looking for safety, a process known as run to safety.  However, there are rare occasions when government bonds are in trouble, and capital flight is from bonds to stocks, so the opposite of the traditional move.   Since this type of exchange for safety is rare, how does one move forward with the confidence required to invest during such events?    Historically, when a government defaults on its debt, private sector assets survive because a crisis involving government bonds causes capital to shift to blue-chip stocks and Tripple A corporate debt.  

The opportunity of a lifetime is uncommon, as an event is produced historically once a century.    It will also mean that the majority must get this wrong to build the energy to send blue chips to record highs.  Panics to the downside are the norm for stocks, but in this case, it is a panic to the upside after a correction low, so the complete opposite is the source of the confusion.  This only happens with the fall of empires and nations, and it is a financial trap for those who do not understand the trend.  Everything and everyone is connected; like a rainforest, everything depends upon something else.  The wolf's reintroduction into Yellowstone had significant implications for elk and deer populations and songbirds, so one variable change in a complex system changed many things

Countries that have introduced a foreign animal into a new environment can sometimes lead to bad outcomes because of the connections.  

When the bond market is turned upside down, it leads to capital flight, and this is the essential lesson of the opportunity of the century,