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Strategies & Market Trends : Roger's 1997 Short Picks
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To: phbolton who wrote (4084)7/18/1997 12:09:00 AM
From: Oblomov   of 9285
 
Another FWIW:

A friend of mine who knows little about the market was telling me
how her broker at Merrill Lynch has been suggesting that she get a
mortgage from Merrill Lynch. The payments would be put into an index
fund instead of being a credit against the debt. When the capital in
the index fund is equal to the debt, the fund is closed out and the
debt is retired.

This arrangement is, of course, a bet on behalf of the debtor that
the market will increase at a rate greater than the rate of interest
on the mortgage.

She mentioned 3 or 4 friends of hers who are currently doing this,
and thought it was a good idea, herself. This is not to disparage
my friend. I only see it as another sign of the market's impending
doom, like the following top ten:


10. record airline passenger occupancies (yet no inflation?)
9. NASDAQ commercials on CNN
8. Motley Fool on Yahoo!; investing made "fun"
7. popularity of "PEG" as a valuation indicator:

PEG = (P/E ratio) / (annual % Earnings growth x 100)

if PEG < 1.0, stock is undervalued
if PEG > 1.0, stock is overvalued

(maybe I am overweened in my mathematics education, but
this seems specious to me )

6. Sport Utility Vehicles getting bigger; Lexus Coach Leather
edition; record recreational boat sales
5. new, less stringent NYSE and NASDAQ rules; new paradigms
4. merger and stock buyback mania
3. rise of cigar and martini bars; reemergence of three-button
suits
2. my corner gas station now sells Barron's and the WSJ
1. everyone knows that even rosier economic times are to come


Any others?

Andrew Aiken
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