partly OT: market and ME war risk:
I am currently on a little bit of margin. My general targets are:
40% cash at Nas 2300
100% invested, but no margin, at Nas 1800
40% margin at Nas 1400
I expect, for all of 2002 and possibly 2003 as well, for the Nas to be (90% of the time) in that 1400-2300 range. Valuations will wither any rally above 2300, and liquidity will put a floor under stocks at the 9/01 low.
The "ME stuff" is pushing the market down. The market is beginning to price in the possibility of 50$/B oil (after a war and embargo). Both Arafat and Sharon are firmly committed to war. I don't think there is even the potential for peace, until both are out of power (or dead).
Arafat thinks he can do what the Hezbollah guerrillas did to Israel in Lebanon (that is, cause an unconditional Israili withdrawal, and a clear Arab military victory). He's making a mistake, because now the war is in the Israili homeland. The Israelis have retreated as far as they can, unilaterally.
The only solution is a separation of populations, along an agreed-upon frontier: all the Jews in Israel, all the Palestinians in their own state. Neither side is willing to accept this, today. The Palestinians insist on the "right of return", which would allow millions of Palestinians to settle within Israel's pre-1967 borders. This would, inevitably, cause another, final, Intifada.
Sharon thinks he can settle Jews throughout the West Bank and Gaza, permanently, and militarily crush any Arab resistance. He's wrong. The Israilis have a consistent policy, for decades, of blurring the demographic frontier. This will only work, if they intend, sooner or later, on expelling the entire Palestinian population into Jordan. I think that is what Sharon plans to do, eventually. The "Palestinian State" he has in mind, is Jordan. The only thing stopping him from doing this, is the threat of the U.S. withdrawing support (and stopping arms sales) to Israel, if they adopt this "ethnic cleansing" strategy.
The reason the U.S. is the only nation to firmly support Israel, is that the 2000-year Diaspora is over. In the 20th Century, through immigration and mass murder, Jews have become concentrated (80% of the total, now, I think), in Israel and the U.S. Noone else has any reason to care what happens to the Jewish people. But everyone uses oil.
Until one or both sides in the Arab/Israili war (50 years long, so far) gives up trying to get what they want militarily, the fighting will escalate. And neither side will do this, until they've been hurt a lot more. And this means there is a big risk of:
1. another oil embargo
2. the Arab world ending all support for the U.S. war on terrorism, making it impossible for us to win that war.
The above is the market risk of Nas 1400. Unless nukes are used, I think that's the bottom. |
