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Strategies & Market Trends : Waiting for the big Kahuna
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To: P.Prazeres who wrote (1620)6/28/1997 12:50:00 PM
From: HH   of 94695
 
Paulo,
Good thought process and I agree rates will eventually come down.
However,I am not as optimistic as you regarding future economic growth.
My thesis is that we are in a deflationary price environment
which poses significant dangers to growth. Preliminary numbers
regarding GDP for 2 qtr 97 are 1.5 % - 2.0 %. I 'm thinking
we are recession bound, the severity of which I am not sure.
However any slow down in growth will impact earnings, which
after all is what ultimately determines equity values.
As I stated, I am completely out of the market, because
I believe the stock market is manic-depressive by nature. Glorious
predictions could turn sour.If we enter a "Brave New World", so
be it. I can live with opportunity loss of not riding a raging bull.
I worked very hard to accumulate some capital and I dont
comprehend what is happening in the stock market.
Several have posted how much at risk one is to buy puts or
stand in front of this locomotive. They are right. Puts and calls, etc
are total risk. But I see a tremendous amount
of risk for those who are long in the market at this stage.The market
IMO is propelled solely by virtue of momentum. It can stop one day.
Your scenario regarding interest rates seems plausible however
it places confidence in the market to be patient and confidence
in Congress to keep a balanced budget.Also, as you agree, a recession
could drain the revenue side.
I see a big casino in action, supported largely because the
participants are willing.Trading tulips.
HH
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