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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 180.21-1.2%Jan 7 3:59 PM EST
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To: Gregg Powers who wrote (13166)7/31/1998 11:33:00 AM
From: mozek  Read Replies (3) of 152472
 
Gregg,
First, thanks for your well researched, incredibly informative posts on the Q.

I think the problem with "potential money supply" is that financial asset inflation doesn't actually increase money supply, even potentially. In fact, the more stock certificates we convert into cash, the less cash there is readily available for continued conversion. At no time are we required to have enough cash available to convert the NAV of the stock market. In fact, small amounts of unbalanced changes in the conversion process can result in large fluctuations in the NAV of the whole market. I believe that an increase or decrease in the money supply creates a a propensity for these unbalanced changes. In a way, it seems that equity prices are a derivative of the money supply. Of course, the function of that derivative includes human factors and responses to economic conditions and indicators.

Thanks,
Mike
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