Tulipomania Blowoff Contest: Why and When will it end? Message Board

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Non-Tech : Tulipomania Blowoff Contest: Why and When will it end?

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Jun 26 5:00 PM EST

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To: KeepItSimple who wrote (2229)	12/25/1999 2:25:00 PM
From: Dale Baker	Read Replies (1) of 3543

As long as money continues to pour into the market faster than new issues are created, a flatline scenario is unlikely. The 510 new IPO's in 1999 probably created about 2 billion new shares at an average $15 apiece, or $30 billion of equity to soak up. How much new money went into mutual funds? I don't have an exact figure but I suspect it was much, much more. You have to break the new money cycle by showing that the market is an inferior return compared to alternatives. And the constant money flow into the market almost guarantees you won't break the cycle. It may turn out to be a largely self-sustaining Ponzi scheme as long as the overall economy doesn't tank. The current working generation will always turn to the market to build retirement savings. Do you think they will turn to savings bonds, munis and CD's? Sort of an evergreen tulip, a variation on the theme.

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