Hi Tom, just a piece of *fact*, and a little interpretation.
Re: money market assets, it is about $984B, which includes institutional and tax-free. The nimber should be compared to stock market cap of $10,500B, about 9.5%, I don't think it is a lot. And, (i) the size of MM mostly depends on supply, not on demand, (ii) These ar part of money supply, so if a stock is bot/sold, no change occurs in money markets, in steady state. Just money changing hands.
Re: rampant speculation, IMHO we saw it in spring 1996, lots of participants lost money, therefore bot large caps, or put money under pro management. I don't think we see it again soon, it is still in memory of current market participants. Now speculation has shifted to large caps. The market did not collapse a year ago because of seveal reasons, which included huge repurchases by important Cos. and generally favorable conditions, it was too early. Now, however, with market cap $4,000B (40%) larger, it is much more difficult to support, on one hand, and the temptation to take at least some profits, is so much greater, on the other. This does not *prove* the coming crash, but I find it to be a very strong reasoning.
Joe |
