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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 73.99+0.2%3:59 PM EST
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To: Ed Forrest who wrote (54469)8/11/2001 6:16:35 PM
From: sea_biscuit  Read Replies (2) of 77400
 
It is amazing to see New Economy bubbleheads clutch at history when it suits their purposes and discard it when it doesn't. Like : "In 12 of the 13 previous Fed easings of more than 50 basis points, the market was higher six months after the Fed started easing".

(Ever wonder what was that 1 of the 13 occasions when it didn't work? It was the early 1930's. But, back then, people were idiots you see. But now, because of internet and all, we have become geniuses! So this time it will be different. Not!)

Come to think of it -- why do people with a long-term horizon tend to allocate more of their money in stocks rather than in bonds? It is because, historically, stocks have outperformed bonds in the longer run. How do we know if this will happen in the future? Yet, that is somehow accepted as an axiomatic truth and never questioned. Why? Because that is what people want to happen. So they eagerly accept it.

I won't be too surprised if stocks fail to outperform bonds in the next decade. And in particular, today's bubble stocks could well underperform inflation, thereby generating negative real returns over the next decade. That is how all manias end -- badly. And this one will be no different.
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