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Pastimes : Ask Mohan about the Market

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To: Jack Clarke who wrote (14241)	2/17/1998 7:35:00 PM
From: Bonnie Bear	Read Replies (2) of 18056

Jack: At age 40 I face the same problem as the typical baby boomer. One can only assume that in twenty years the S&P stocks will be offering dividends again. I don't want to be caught still holding cash when interest rates go back to 3%, something I never thought I'd see in my lifetime. It's a rude awakening for me, so I'm getting forced into being a bull in self-defense. Cautiously, mind you! Any cash held since 1994 has lost over half its value relative to the S&P. Where do you think interest rates are headed? I'm trying to get some guesses from the audience. And yes, it's like the top of 29, only they didn't have derivatives holding up the market in those days. Who to sell to? (1) the company buys them back. This is part of the reason the market has been going up. Scarcity creates demand. (2) At a global level, the stock market and potential equities market is in its infancy. Children in South America may buy them. At a global level it seems to me that all this money will tend to redistribute over time towards areas of underinvestment and create jobs in places where labor is cheap.

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