Zeev's Turnips - No Politics Message Board

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Strategies & Market Trends : Zeev's Turnips - No Politics

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To: Zeev Hed who wrote (17630)	1/2/2002 12:27:00 PM
From: Steve Lee	Read Replies (2) of 99280

Zeev, I have a question about your roadmap suggesting higher stock prices based on liquidity. I might even call it a disagreement if I were feeling brave <g>. You argue that there has been a recent increase in liquidity due to rate cuts, tax cuts and a possible stimulus package. I say there has been a reduction in liquidity due to stock market losses since March 2000. The last 21 mths have seen $5 TRILLION wiped out (it may be a little less than this now as I worked the figure out a few weeks back). Stocks are a liquid asset, even a currency, and therefore their value can be considered to impact the economy similar to fluctuations in the money supply, but with a time lag due to the time it takes for people to calculate, and psychologically adjust to and accept their losses. For Enron alone, $50 BILLION was recently wiped out just in stock, regardless of job losses or knock on effects on other companies. Is the added liquidity in non-stock currencies really enough to validate the turnip's predictions of more money chasing stocks?

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