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Technology Stocks : Intel Corporation (INTC)
INTC 35.53-1.1%Nov 14 9:30 AM EST
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To: mauser96 who wrote (25718)7/7/1997 11:11:00 PM
From: Fred Fahmy   of 186894
 
Lucius,

<Historically, stock price inflation has eventually spilled over into
into the general economy, presumably because people want to spend some of their profits.>

Even if one subscribes to this theory, today's dynamics may be considerably different.

Much of the runup over the last couple years has been due to large sums of money flowing into mutual funds by baby boomers and others investing for retirement. I don't think people want to "spend" these "profits" but rather would like to see their investments compound. Also with today's macro economics in such good shape (i.e. moderate sustained growth with no inflation) people are likely to re-invest their profits as opposed to spending them. I also think there is a good chance that any future interest rate action will be downward in nature. This will help both earnings and stock prices.

Of course we will continue to have corrections. The NASDAQ already had one major correction this year (almost 20%). But, in the end if macro economics continue on course, there is no reason we can't expect stocks (especially some of the techs which have P/E's below the market averate and below their growth rates) to continue to appreciate nicely.

My 2cents,

FF
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