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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: Wyätt Gwyön who wrote (895)11/23/2000 2:34:47 PM
From: Tommaso  Read Replies (1) of 74559
 
Much too early to tell if this is a trend, but AMG Data reports over $8 billion of outflows from mutual funds as of the week ended last evening:

amgdata.com

It only takes a cessation of buying demand and an effort to sell to meet total withdrawals of 5-10% to bring the market down drastically. For the past two years there have continued to be puffs of added liquidity (over $160 Billion so far this year from outside the US coming into our markets) that kept the bubble inflated. The minute this stops, it will come down like an inflatable building when you shut off the air pump. Actually faster because using that dead metaphor, you have to let half the air out to get the building halfway down. You son't have to take half the value of the market out of it to cut it in half. Stocks aren't claims on wealth, only expectations.

But a collapse will create huge opportunities. IOM is currently showing a P/E of under 10 and their products are terribly useful. Apple is much the same. AMAT is getting there. My dream would be to pick up these stocks at P/Es of about 6. I guess I never got over buying Royal Dutch Petroleum at a P/E of 3 during the first great oil shock. Within a few years its annual dividend alone was almost equal to half the price I paid.
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