earlie--
i agree with you that the major listed stocks are going to have a tough time and that many people are going to loose a lot. however, i do not think it will be as severe as you think.
for one, while there really is too much money chasing the market, this is advantageous to us in that people are becoming more circumspect in their investments. they are still buyign during pullbacks, and they are broadening their assets-- not sinking everything into stocks.
while bankruptcies are going up, i believe that it is an effect of liberalized credit policies at the commercial banks. i am a college student and i got a preapproval notice in the mail for a PLATINUM visa from mellon bank. i think that most of the bankruptcies are coming from people who should not have credit cards in the first place. also, the increasing # of bankruptcy lawyers is staggering. IMHO, the increasing # of bancruptcies is a a non issue since it is related to mismanagement in the industry, and it is:
a) not really effecting the credit markets that much
b)being corrected now.
your arguments about the fund managers is true, but the problem more significantly is that they are in the largest cap stocks. that is more dangerous than anything. has anyone seen an current #'s on how long it would take magellan to go to cash?
as for deflation, i think it will help more than hurt, by raising real living standards and increasing consumption. we have never had an episode in our economic history that parallels what we are going through now.
i know, there is a factor in this which i have not considered and that is my age, which no doubts tends to create a more optomistic image in my head. however, i went exclusively into small caps last fall, so i know what it is like to own nothing but losers. true, it wasnt for a prolonged amount of time, but it hurt like hell. these people who are chasing the majors are going to get hammered, and i think it is going to be funny. i do not think they will get out of the market, because they do not want to eat dog food in retirement.
good luck to all,
trey |
