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Strategies & Market Trends : Paint The Table

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To: Jorj X Mckie who wrote (1044)	11/6/2001 3:05:38 PM
From: Original Mad Dog	Read Replies (1) of 23786

I think (to expand on the car analogy from yesterday) that the primary effect of the cuts in this environment is not psychological but rather substantive. The rates will ultimately cause money to flow into the economy that otherwise might not flow, and that will ultimately have a beneficial and stimulative effect. But because of the current psychology, the speed with which the money flows into the economy will be much slower than it was in 1999, for example, when people couldn't wait to deploy money wherever and whenever they could. In 1999, rate cuts added further fuel to a car that was already running at full speed. Now, rate cuts are like storing fuel for that time in the future when the car is finally repaired. So I don't expect the cuts to help the market now, but a few months to a year or so down the road, they will help the economy. When the signs of that appear, the market will be helped. I think the recovery when it finally appears will be extremely powerful because of the strength of the U.S. system, but we are just gonna have to be patient and not worry so much about the Fed for awhile.

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