ild, I'll answer as many as I can. We will be in a recession as far as real GDP goes, but it may not show up with the faked numbers the govt. now has in place. The tech bubble is over. There will be many huge bounces, but folks paying $250 for a stock that won't have eps for five years is a fossil.
AG doesn't recognize the bubble, but, right now, he doesn't like what he is feeling and seeing. I think he is sweating bullets. He only has one trick, increase credit, and that is becoming more and more passe. I suspect the next cut will have much less impact than the last and that the third in the series will actually have a negative impact on the market.
I am not as bearish as I used to be because so many stocks that were priced over $200 are now under $5. The most overpriced sector of the market, dotcommunists, have been taken out and shot. I am still bearish longer term, but with the Naz well under 3000, I can't hate it as much as I did when it was pushing 5000. As the old punchline goes, we know what the market is and now we are talking price. <g>
Mutual funds are individuals. They get cash from individuals and when they get it, they invest it. Since most are closet indexers and have given up on performance, they tend to move in lockstep with individuals. Both tend to be totally wrong at major turning points. Science and Tech funds were down 36% last year. More diversified growth funds were down 20%. If individuals did worse, it is because of one or more of the following factors: 1. They held fewer issues. 2. They were even more concentrated in garbage than even the dumbest fund manager. 3. They held little or no cash. 4. They held no bonds, which had a mediocre year, but much better than stocks. 5. They used margin. 6. Their costs, friction, were much higher. 7. They traded too much. 8. Let's face it, despite the stories from the glory years and the way I always refer to my fellow fund managers as a bunch of dummies, most fund managers know more about investing than most individuals. They are still dopes, but less ignorant dopes. 9. There are few old-fashioned brokers with common sense who help individuals. Most are asset gatherers who could and probably should be selling cars or long distance phone service. 10. Almost nobody used any of the great hedging techniques available because "there was no risk in trash tech stocks."
In the short term, institutional ownership can move a stock's price, but, in the long term, reality wins the day. We have seen this many times with MU. It is a real institutional trading sardine that is kept afloat at levels it doesn't deserve in a million years. But, when reality finally seeps into the wooden heads of money managers, the stock does eventually go down again.
That was a long consultation. I usually get 25 cents for this kind of work. <VBG> |
