Bob Brinker: Market Savant & Radio Host Message Board

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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host

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To: stock bull who wrote (4776)	4/27/1998 5:15:00 AM
From: Skeeter Bug	of 42834

i think i've reached my conclusion about the markets. the current market is liquidity driven by a fed chairman that is scared to see what would happen if he stopped increasing m3 at 12% when inflation is 2%. a large amount of this money is finding its way into the market. that is why we can say "what the heck" when earnings growth is slowing drastically and watch all the big stocks go up 10-30% in 3 months on this great news. too much money chasing too few stocks. basic economics. the japanese situation is just exacerbating this issue. when this spigot is turned off then look out below. too many stocks chasing too few dollars. the wealth effect will disappear and people stop spending. end demand goes in the toilet and then companies aggressively lay off people to sustain their absurdly and ridiculous valuations. the fewer employed the fewer the end purchases. a deadly spiral will ensue. too much product chasing too few dollars. real estate values will tank. this from a guy who is feeling lucky for the privilege of over paying for a home in this ridiculous market. real estate seems to be the other destination of the fed's excess cash policy. gee, hope i'm not too positive for you all ;-) in any case, when you see the liberal monetary policy starting to get ratcheted away then that is my signal to take profits and walk away an enriched individual. that cash, imho, will be worth a lot on the other side of the market when it is time to buy low. hey, if i feel lucky then i may buy some puts - but that is also dangerous in an irrational, liquidity driven market. if this economy turns south then i feel bad for the buy and hold but don't think crowd. they will have wasted a great opportunity. happy investing ;-)

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