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Non-Tech : Philip Morris - A Stock For Wealth Or Poverty (MO)
MO 67.01+1.7%3:59 PM EST
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To: Geoff who wrote (2197)8/27/1998 1:50:00 PM
From: Ralph Bergmann  Read Replies (1) of 6439
 
I have my doubts whether this market will push up soon again.
The only point which is of interest in terms of stock prices are earnings. Will go earnings up in the near future? No, I don't think so . The income of the US companies was generally weaker over the past half year. In the enviroment of a financial crisis, shrinking margins due to higher competition and a breaking away buying capacity of a lot of countires better earnings is very unlikely. The whole world market is affected by this crisis. Europe is the only region where the growth rates are climbing and I don't expect it will be able to maintain these rates in the light of this global downturn.
In a three to five year outlook, I think national markets will move closer to each other and create a further global growth. But for the next one or two years I think this crisis will be serious.

There is another important problem: 1987 governments were able to add liquidity by lowering interest rates. If we would have a similar serious crash I think lower interest rates won't show much effect since interest rates are already at historical lows. Therefore a crash would presumably show it's effect for more than two years (as in 1987).

I have a lot of small caps. Here the crash already occured. Most of my stocks fell nearly 50% or more during the last months, and surely not because of bad results but of missing buyers. The Russel index 2000 is at a year low.

I really would like to be optimistic but I fell hard to do so.

Ralph
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