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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: yard_man who wrote (145922)1/24/2002 12:54:42 PM
From: reaper  Read Replies (4) of 436258
 
uh oh, now the bears are yelling at each other. what does that mean?? has KIS' return created and instability in the CFZ force?

Tip, I think you're wrong about J6P "crashing" the whole thing. At least as important as J6P money flows are (i) company buybacks or lack thereof; (ii) insider sales or lack thereof; (iii) cash M&A transactions; (iv) pension fund money flows; and (v) net foreign investment.

Points (i) and (iii) are a decided negative, as corps. don't have cash for buybacks or M&A; point (ii) I think is actually a modest positive as insider sales have slowed from their manic pace of 2000&2001. Net foreign investment is still (+), I think, and pension funds are actually re-allocating TOWARD equities on average.

So I don't think 2-3% of public mu-fu money coming out "crashes" the whole thing. It's just like one more little termite eating away at the foundation of TradeLite's house; its the combination that crashes the whole thing.

That said, Sun is wrong about "professional traders" driving the market. This very well may be true on a short-term basis. But it doesn't matter that they are 95% of the volume; that is just churning volume. What matters to the longer-term direction of the market is the NET MARGINAL BUYER (or lack thereof), and those buyers are J6P and (i)-(v) above.

Cheers
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