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Microcap & Penny Stocks : red and blue BBQs - patience, trust and DD
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To: RockyBalboa who wrote (33)9/16/2001 5:08:25 PM
From: RockyBalboa  Read Replies (1) of 49
 
Why buying stock is not patriotic right now.

Buying stock means postponing personal spending. As everybody knows from business school, in the long term, saving always equates investing. In stark contrast to the recent liquidation of public stock holdings to generate liquidity (which, in turn bolstered consumer confidence, or kept net credit growth in check) buying stock means a reduction in the levels of personal spending.

I'm not talking the behaviour of pikers, here. Do not think one second that "patriotic buying" means what legions of pikers believe when buying up stock not to own it, but in order to dump it on the next greater fool.

Buying stock does not happen during an economic downtrend. The public is not buying stock when personal income is declining, savings rates declined and, moreover, the corporate profits sag for at least 2 additional quarters. The public is buying stock when everything is bright...

Short selling stock in addition to existing positions can be even more reasonable during weak times: It creates liquidity which can be used to cover other liabilities before liquidating interest bearing assets, and it can support markets by "delayed buying".

Selling stock now could indeed bring long term support to the markets because it provides potential liquitity. Buying stock today does not, it withdraws liquidity which is vital in other areas of the economy.
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