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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Ilaine who wrote (72335)2/27/2001 12:56:37 PM
From: chic_hearne  Read Replies (2) of 436258
 
- in short, it was a clustershag, the economic equivalent of the Perfect Storm.

You mean a little like all the baby boomers that will start retiring soon?

As the bear grinds away, many are starting to figure out after a bad year that they didn't save enough. After another bad year or two, they will really understand that they didn't save enough.

Therefore, they are likely to cut spending and put their money into forms of retirement accounts. Many of the bulls would like to lead you to believe that this is the perfect recipe for higher equity prices. If you take the rose colored glasses off, you ultimately will see that higher equity prices are the result of higher earnings and revenue by the underlying companies. So we have a large percentage of Americans nearing retirement, slowing spending, and increasing saving.

So do equity prices go up? Simple answer, no. They aren't gonna buy Cisco just because it's Cisco. If Cisco's business slows, they will sell the shit out of it no matter how much money is thrown at it. So where does this money go? Money heaven, and a few lucky shorts. Say Cisco gaps down $5, that's $40 BILLION worth of money gone out of the system, in theory.

That's the environment we're stuck with for some time. The argument that the boomers will power the stock market higher is foolish IMHO. In fact I see it as they will be the leading cause to slow consumer spending and grind our economy to a halt. Or to use your storm analogy, they are the eye of the huricane.
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