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Strategies & Market Trends : John Pitera's Market Laboratory
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To: John Pitera who wrote (6063)5/15/2002 9:59:44 PM
From: Hawkmoon  Read Replies (1) of 33421
 
I think the biggest issue facing these millions of investors is that they need to learn the basics of sound fundamental investment.

I believe anyone can concur with that John..

But with all of that 401K and IRA money being deployed into stocks, primarily because other asset classes were not offered or illiquid, it was inevitable there would be an equity bubble..

Had retirement accounts emphasized bonds over stocks, T-bills would have endured a bubble. Had there been an emphasis in real estate, that money would have driven land prices through the roof (as they did in Japan)..

The real problem is that the US investor just did not have sufficient investment vehicles available to them other than the US equity market. Overseas investing is fraught with political risk and corruption.. And real estate is difficult to buy and manage in corporate offered IRAs and 401Ks.. (especially if limited mutual fund choices are offered).

So all of that money was concentrated here.. and combined with capital flight after LTCM and the Asian Contagion from overseas to US shores, the US markets were the "only game in town"..

And as of yet, I'm not sure that this has changed to any great degree.

Of course, should the US pursue this war on terror further, it will likely create short term instability, followed by long term stability as rogue regimes are neutralized and corruption diminished (knock on wood).

Because this is really a war about re-establishing a semblance of global political and economic order.

Hawk
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