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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: Lars who wrote (605)9/1/1998 2:46:00 PM
From: Hank Stamper  Read Replies (3) of 15132
 
Lars wrote: " If the Japanese sell, the operative question people need to ask themselves is "And then what?". People need to think this through, imho."

Okay Lars, I'll take the "think this through" challenge.

1. US rates--both long and short--drop.
2. US currency drops against the Yen.
3. The Japanese use the proceeds from their US bond sales to bail out their banks. This is good, at least in the short term. Long term goodness will be determined by whether or not they restructure their banking system.
4. Lower bond returns favour higher equity prices because EPS and dividend yields appear better when compared to lower bond returns.

So Warren or Bob Brinker, what grade would you give me on this? Would this test count as a Money Talk mid-term exam? Who's the TA?

Ciao,
David Todtman
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