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Technology Stocks : Intel Corporation (INTC)

INTC 48.59

-1.3%

3:59 PM EST

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To: Nostradamus who wrote (22787)	5/25/1997 9:02:00 AM
From: Patrick Koehler	of 186894

Sorry - I can't let the comment go unchallenged about today being similar to the 1929 and 1987 crashes. In the 1929 crash, the PE's of Dow stocks were in the hundreds, and the margin was 10%. Everybody was leveraging up with the margin and when the stocks started down, people were wiped out on margin calls and sold. Their selling led to further decline and more margin calls. In the 1987 crash, we were entering the computer trading age, and the computers started dumping stock at programmed points. That won't happen today for the same reason, because of the 50 point rule. The next big crash will be when funds to mutual funds start going out instead of coming in. The market starts down. Mutual fund holders don't see a return, so they exit the funds. The funds have to sell more to pay out to the fund holder. The spiral continues downward until funds return to a positive inflow. Patrick

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