Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Maurice Winn who wrote (4431)	6/7/2001 5:35:59 AM
From: LLCF	Read Replies (1) of 74559

<At what interest rate would you say shares are better than earning interest? > I don't think there is a fixed rate... who is to know?? It could depend on a miriad of things, hell perhaps interest is better for long periods of time due to economic circumstances [has happend in the past for what, up to 20 years??? and that's with reg Q holding rates down for savers]. Here's a new paridigm for you: The incredible change in technology wipes away older more established companies while the "new inventors" rocket forth from nowhere to dominate entire sectors of the economy [Qualcomm vs Motorola]... these new and arcane technologies make rich beyond dreams those who understand what's happening while laying waste to the equity holding "general public". "Momentum investing" becomes wildly popular beyond all expectations over the years as the public tries to maximize gains and stem losses... volatility in the stock market explodes as wild swings dominate during the transitional and uncertain tims of these technology shifts making investing in shares theoretically magnitudes more risky [VOL=SIMGA of stock P's] than every before. Risk/return characteristics of stock prices vs other asset classes causes eventual flight from the class as investors await emergence of "winners" in technological battles and payment of newly popular dividends paid out by those newly dominant "Microsoft" type monopolists [Gorillas if you will] due to the elimination of tax's on dividends [or at least double taxation]. Meanwhile interst rates on near cash instruments have now outperformed for the past 10 years due to high rates demanded by investors as they flock to GOLD, REAL ESTATE, and other hard assets to avoid the federal researves printing policy... the money market rates offered by corperations and banks is essentially priced to offer inflation plus 3.5% is the investment of choice and looks to remain that way with 60% of all investors cash having moved there. DAK

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