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Strategies & Market Trends : Value Investing
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To: Michael Burry who wrote (2820)12/20/1997 1:45:00 AM
From: jeffbas  Read Replies (2) of 78704
 
I agree with you almost 100%. But have a few questions to stimulate further discussion.

-interest rates at 5.0% would mean what for the general market and specific sectors/stocks - run out and buy FNM at an all time high and 20 p/e? can you think of any reasonably valued, leveraged interest sensitive stock that would be good in this environment?

-Except for a handful of tech stocks, like IBM, MSFT, etc., tech stocks have seen a 1990 style correction. about the only thing worse would be a 1973-74 correction. Do you see it THAT bad? (I was there.)

-severe rolling corrections have characterized this bull market. You do not see the possibility that large stocks could move sideways for an extended period, supported by the effect of declining interest rates on the capitalization of mediocre earnings - while the massacred smaller stocks gradually recover?

-I see no excesses in the economy or stock market, except in the key S&P 500 category of stocks. I also see much of the money supporting these stocks as coming from company 401-K type plans where there is a great deal of inertia to making changes. What would drive a change?

-Since i see the economy as without excess, if the market really started to cave in, it might precipitate a recession, which would have Greenspan driving short term rates to 3% again to avoid. (We have a lot further to zero than Japan did.) What companies would benefit from 2% cut in short rates - same ones as from cut in long rates?

-Have you heard of any price cuts yet on products from Asia?

I think that will do for a start :-)
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