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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA
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To: dvdw© who wrote (4957)10/13/2000 5:30:45 PM
From: UnBelievable  Read Replies (1) of 19219
 
Do you understand that there is not enough money to continue to enable to bid up the price of a stock at a rate that is totally unrelated to the rate of real goods and services which the company can be expected to produce now and in the future.

And the problem is that where the FOMC to create that much liquidity there would be no way to prevent the extra dollars from exiting the stock market, being used to bid for real goods and services, and in the process creating rampant inflation.

Furthermore, such an increase in the rate of growth of the dollar when compared to the rate of growth of foreign currencies would make the dollar less valuable over time. Foreign investors would have to take the repatriation loss into account before deciding to invest in US markets. On the margin this would mean there would be less foreign investment in US markets. Lower foreign demand for US equities would reduce their price making them even less attractive to other investors, and ultimately result in lower stock prices.

In addition, even though some companies have attempted to explain their poor financial performance because of the strong dollar the impact on corporate performance would be significantly more adverse with a weak dollar. A significant portion of corporate profits are based on securing the various elements of production in foreign markets. The US imports much more than it exports. The affect of higher costs would dominate any additonal sales which might result if the dollar were weaker.

Stocks are not going back up because there just is not enough money to continually grow stock prices at the rates expected. No matter how good the technology, leadership, or possible or necessary infrastructure buildouts.
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