How high will Microsoft fly? Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : How high will Microsoft fly?

MSFT 492.01

+1.3%

Nov 28 9:30 AM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Frank Ellis Morris who wrote (27369)	7/26/1999 6:55:00 PM
From: Stormweaver	Read Replies (2) of 74651

Actually Frank a rate hike now would be better than a potential crisis due to an inflated economy ? I'm really starting to get concerned about all these "inflated" internet related stocks and the plethera of new IPO's that seem to be coming out each week that. To me this is just ficticious wealth. Here's a snippet from a fool message post: Certainly at some point, financial asset inflation could be a major problem in US markets. When this happened in Japan in the 1980's, the market was eventually chopped 2/3 and has been down for nearly 10 years. It seems to me that what we have here is a market of individual stocks with potentially high profit growth but in the aggregate returns can grow no faster than total profits in the economy. The bottom up approach has to be reconciled with the top down view. So, broadly speaking, if the approximately $12 trillion in stock market capitalization does not appear to be capable of earning a market rate of return, e.g. about $600 billion annually, some stockholders will try to trade their stocks for dollars. But there aren't nearly enough dollars to monetize these inflated stock prices, so stock prices will have to come down and interest rates up as the competition for the harder, more attractive assets heats up. This will be a vicious circle as it cuts further into profitability, and makes high p/e stocks even more vulnerable by comparison. But when will it start? The next cyclic recession would seem the obvious answer, but recessions also cut capital spending demands thus keeping interest rates down. So maybe the bubble doesn't end for a while? Full message boards.fool.com

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next