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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 168.08+1.8%12:59 PM EST
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To: A.L. Reagan who wrote (70493)4/13/2000 7:44:00 PM
From: Hashem Akbari  Read Replies (2) of 152472
 
There may be a bigger issue that affecting market; something to think about. The question of supply and demand imbalance. There used to be something called 'deficit,' running over $300b per year. The majority of that deficit was funded by citizens. That was a continuous supply of mainly long-term bonds. Now that source is dried up. The majority of the $ was coming from pension funds. But the $ is still available; with my crude estimate it is about $40B per month. If that $ chases the existing bonds, the bonds interest rate will come done and that would make stocks more attractive (we see the evidence of this through yield inversion). If the $ is directly invested in security market, that also drives the stock prices up. This is the current situation that we are in at this time. How this imbalance is going to be resolved over a long term? My guess (from observing historical data) is either inflation or recession. Both inflation and recession solve the imbalance, one by raising prices, the other by reducing the supply of money. On the short term, I do not see either a sign of inflation or a recession. Hence, I have to conclude over the intermediate horizon (3 mons to 1.5 years) the $ that left the market comes back to the market begging for even higher prices for equities.
Hashem
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