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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 685.69

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Dec 5 4:00 PM EST

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To: Les H who wrote (41293)	2/25/2000 5:16:00 AM
From: KyrosL	Read Replies (1) of 99985

Les, excellent article. However, I have a problem with his comments that manias are generally good because they result in quick redeployment of capital. In the case of the railroad mania, this was the case because railroads were franchises and there was little or no duplication when building the infrastructure. In the mania we are in, there is tremendous duplication and the infrastructure we are building is guaranteed to produce very little, if any, profit and even result in some serious deflation in the not too distant future. In other words, IMO, the current mania has resulted in a major misallocation of resources. Huge amounts of money and talent are flowing to fantasy economy companies where the rules of the game (reasonable profit expectations) have been suspended. Meanwhile, real economy companies are getting deeper into debt not to invest but primarily to support their stock. The infrastructure providers (Cisco et all) who depend on the fantasy economy for a good deal of their sales, are in for a rude awakening in the relatively near future.

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