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Strategies & Market Trends : Zeev's Turnips - No Politics
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To: ajtj99 who wrote (94934)7/16/2002 12:05:20 AM
From: t2  Read Replies (1) of 99280
 
the currency hit is forcing re-patriation of funds that were formerly tied into equities. That is one reason why the market drop has gone further than many had anticipated.
That is another reason why the drop in the USD is also bad for equities. It is a reflection of lack of confidence in the US market.

Have we already seen it is the big question; the way the SnP has been tanking, we might be at the end of the heavy foreign selling..that is widely believed to be going on.

If that is the case, stocks might finally do what they are supposed to do under normal markets...that is, big cap multinationals rising during currency drops. Most Dow stocks have reasonable PEs and share repurchase plans. It could be a big factor.

As for bonds versus stocks, I believe bonds may underperform stocks during August, but they should be stellar performers for the 12-months after that.

Not if the dollar stays at current levels or weakens. It might turn out to be the worst investment for the coming 12 months, imho. Have to remember the value of the bonds/cash is only measured in dollars.
However, the worth of a global business cannot be measured in dollars alone.
That is one reason you can see a melt up in Dow stocks with a weaker dollar. I like to use the example of Japanese automakers..their stocks go up when YEN weakens and vice versa.

I realize that over-ownership of US stocks by foreigner is what makes this situation different. That is the big unknown..how much have they bailed out.

Remember, US bonds are more owned more by overseas investors than US stocks; wonder how much currency pain they can take with their safe investment.

Will be a very interesting couple of weeks.

JMHO
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