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Politics : Stockman Scott's Political Debate Porch
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To: Mannie who wrote (26118)8/22/2003 8:27:16 PM
From: lurqer  Read Replies (2) of 89467
 
The way the those indices track each other is astounding.

I believe the point about the Japanese market being buoyed by the American boom in the '90s is well taken. I'm going to have to check my sources for more Japanese demographic data. One of the ideas I'm "toying" with is that after the "pricking" of a speculative bubble, first CapEx severely shrinks because of "overbuilding/over investing" during the prior mania. But because these bubbles occur near the end of a generational spending wave, the consumer spending will start dropping. In the ’29 bubble, the demographic profile made this happen simultaneously with the CapEx spending collapse. In the ’66 and ’00 bubbles, there is a delay in the demographic spending fall. Eight years elapsed, between the ’66 peak and the ’74 low (best seen on an inflation adjusted chart). The ’74 low matched the trough in the demographic spending.

This summer was characterized by a rather narrow range bound. I would expect that range to expand, but for the market to remain within a range. But not as long as the range persisted for Japan. Buoyed by a flood of liquidity and the trailing “bulge” of demographically induced spending, the markets are currently levitating. By ’07, the demographics will be fighting the market. Plus inflation should be curbing the liquidity. Bernake may say “We have a printing press”, but if inflation is at 6 to 7% and rising, is he free to use it?

Thus my current “take” is the range may last a while, but not as long as the Japanese range. By ‘07/08, we “should” be plunging to a valuation low.

Now, if I can just get the market to listen to my “plan”.<g>

JMO

lurqer
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