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Strategies & Market Trends : The Amateur Traders Corner

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To: Tom Hua who wrote (16950)	12/6/2001 3:54:29 AM
From: Ashley800	Read Replies (1) of 19633

I agreed with you - until today. And I don't agree with the statement that Greenspan doesn't want the markets to get this out of control either. AG is playing the consumer like a puppet. The rate cuts and liquidity are not to get people or businesses to borrow as we know the demand isn't there. Its to create the perception that they alone will jump start the economy (which on their own can not). In anticipation of the "fixed" economy kicking in in 2002, the markets are rallying creating the "wealth effect" (same effect that Greenspan was concerned about in 2000 would overheat the economy - hence the rate increases). The "wealth effect" will cause people to spend more (just as it did in 1999/2000) which in turn will eat up the inventory supply and get businesses buying again. And wammo, the economy is back on track. Sort of a back door fix. The average person spends $881 on Christmas. 99.9% of investors are long the market (seems like everyone except me and about 15 others on this thread). If you have $2,000 in the nasdaq long, with it being up 40% from its lows, Christmas just got paid for. People all of a sudden have this 30-40% more money then they had Oct. 1st, they also pay less for gas (and now heating oil) then they did 5 years ago. They refinanced their mortgage and are saving a few hundred a month there. You (and Greenspan) know they're going to spend it. The consumer's spending will jump start the economy - without ever borrowing at the lower interest rates. (Businesses will eventually take advantage of the lower rates as soon as inventory pipelines become reduced. Then they'll start raising rates to slow it down). Although I'm already down for 1600 on the nas, my guess today would be 2600 and 11,000 on Dow (need that wealth effect!). The only down days between now and the end are profit taking days. My take anyway. Dave PS As soon as I close out all my shorts and go long, you know nasdaq 1600 here we come!

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