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Pastimes : The Naked Truth - Big Kahuna a Myth
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To: pater tenebrarum who wrote (59266)8/30/1999 12:09:00 PM
From: TheStockFairy  Read Replies (1) of 86076
 
If you stick to his thesis that the wealth effect alone is not propelling the US economy, I would have to agree. You must separate out the rise in stock prices with the wealth effect, unless you are submitting that corporation's buying habits also are subject to the wealth effect. An example of this would be that company with a higher stock price is more likely to purchase more high quality washing machines than they were before their valuation had risen. I would agree that a company with a lofty valuation would be more likely to make an acquisition, but I would shudder to think that a company would make more outstanding purchases based on the assumption that their stock price was going to remain stable or at a "permanately high plateau."
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