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Strategies & Market Trends : The Millennium Crash

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To: Investor2 who wrote (2169)	2/4/1998 10:25:00 PM
From: tekgk	Read Replies (3) of 5676

>> 10,200 on the DJIA and 130% of GDP? This was a back of the envelope calculation based on a 8.3 trillion dollar economy and the total market cap of around 8 trillion. I adjusted slightly for the psychology of crossing 10,000 DJIA and then not being able to hold. The GDP number is reasonably accurate and can be verified at various sites. The total market cap number seems to vary in various news reports etc. I guess it depends on which exchanges are counted etc. I use 1 trillion per 1000 Dow points as a rough swag. If you have more precise figures that are updated regularly I would appreciate it. >> Do you know if there is a general rule on how much lag there is before currency changes effect stock prices? Not really, the delay seems to vary considerably by country and there are so many variables involved that a simple relationship can not be determined. For a country like the USA with a large current account and trade deficit I think that it could be as quick as a few months like the ASEAN countries last summer. Since foreign investment was the biggest single reason for the bull market, it's probably going to be the biggest single reason for the correction if the dollar falls. BWDIK. >> The dollar hit a three-month low The hard part is guessing how much is enough to spook easily spooked foreign investors. Europe seems to want to keep the US currency up and theirs down at least until the currencies are fixed together in May. This is speculation on my part and that of several economists who voiced similar opinions at DAVOS. The Yen/Dollar exchange could also trigger dramatic currency flows if the huge pile of money tied up in the Yen/Dollar carry trade decides to unwind.

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