CSCO - where's the bottom?!?!? Bear Thread Message Board

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Technology Stocks : CSCO - where's the bottom?!?!? Bear Thread

CSCO 77.42

+4.6%

Nov 13 3:59 PM EST

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To: Monty Lenard who wrote (13)	11/11/2000 8:16:02 AM
From: Monty Lenard	Read Replies (1) of 253

Then this! The Great Crash The U.S. stock market boomed in the 1920s. Prices reached levels, measured as a multiple of corporate dividends or corporate earnings, that made no sense in terms of traditional patterns and rules of thumb for valuation. A range of evidence suggests that at the market peak in September 1929 something like forty percent of stock market values were pure air: prices above fundamental values for no reason other than that a wide cross-section of investors thought that the stock market would go up because it had gone up. By 1928 and 1929 the Federal Reserve was worried about the high level of the stock market. It feared that the "bubble" component of stock prices might burst suddenly. When it did burst, pieces of the financial system might be suddenly revealed to be insolvent, the network of financial intermediation might well be damaged, investment might fall, and recession might result. It seemed better to the Federal Reserve in 1928 and 1929 to try to "cool off" the market by making borrowing money for stock speculation difficult and costly by raising interest rates. They accepted the risk that the increase in interest rates might bring on the recession that they hoped could be avoided if the market could be "cooled off": all policy options seemed to have possible unfavorable consequences. In later years some, Friedrich Hayek for one, were to claim that the Federal Reserve had created the stock market boom, the subsequent crash, and the Great Depression through "easy money"policies. econ161.berkeley.edu Naw...can't happen again. This post is probably the bottom signal needed. Monty

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