I agree with you, the current interest rate is too high comparing to the current inflation . And we will see a rate cut in the next one to two month .
I think you understand that the current world economy is quite different than
that of 50 years ago. Nowadays, we have the 401k fund , which dump billions of
new money to the market every month. We have oversea hot money , which can move from market to market within a matter of few minutes. Current economy is led by high tech, the new economy, which will increase the productivity, while 50 years
ago , we are talking about traditional heavy industry. Where do you think those rich people will move their money to when Indonisia had a financial crisis, or where those Jpapnese big corps will move their money to in time of bank crisis ? and what US
stocks those money from overseas will bet on ? That is the reason we now have two markets in the US stock market, one is small / Mid cap stock market, which has been in a bear market since last Oct, and the other is big/Mid cap stock market which continue growing since last Oct. Recession only means the market will grow slower,
and those big cap companies, companies like INTC, MSFT, CSCO, ....etc will continue grow, people will continue buy cars, computers, food, furnitures in time of recession. But for those small cap companies , it may sink into the water in time of recession.That is why we now have two markets, and will continue to be so in the years to come. Besides, do not forget the scale of the world economy is continue growing , no matter it is in a recession or not, because the world population is increased in the rate of 100 million per year.
You probably still remember , in early 90s, when our market was in a bull, Europe was
still struggling in a prolong recession, and ASia was in a bull market in early 1990.At that time the medias did not talk about the recession in Europe and the economy just held pretty well. Now Asian is hitting the bottom of its recession, and Europe is in a strong economic growth, the medias talking the Asian financial crisis everyday.
In 1982 , Regan called the Russia an evil empire , and Russia is not even part of the
world economy, even today the scale of Russian economy is still very very small, and I do not see any economical impact will be on the worldwide economy if
Russia dispear from the earth tomorrow; But The medias sing the Russian song everyday. I do not understand what you mean that the rest of the world is in a recession. If you look at history of world economy, there is always somewhere
in the world which is in a recession every year. The past down of DOJ was driven by emotion. If you look at the chart of DOJ since last Oct, DOJ continued growing, and the big cap with fundamentals and quality continue growing. I bet there are a lot of people talking about recession or even depression last Oct, and we continue holding pretty well. Again, I agree with you the real rate is too high, and we will see a rate cut in the next two months. |
