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Gold/Mining/Energy : Gold Price Monitor
GDXJ 96.04-1.4%Nov 17 4:00 PM EST
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To: Crimson Ghost who wrote (8942)3/28/1998 12:34:00 PM
From: Terry Rose  Read Replies (1) of 116762
 
George, You may well be right that future inflows into the stock market via Social Security may be underpinning prices since stock prices are forward-looking. However, at the present time the Social Security's trust fund has no cash to buy stock since it has been looted to help pay for deficit spending. If John Q. Public can earmark future Social Security taxes into the stock market this may support stock prices through more demand. However, this will reduce future cash going into the cash account of Social Security and therefore less cash can be raided to support the deficit spending by our government. The rising deficit would then have a negative on stock prices. In my opinion, this scenario would then be a wash on stock prices.

I would also like to add one other thought. So much of the spin on the reason why stock prices will continue to go up is that all this Keough and Ira money continues to flow into the market. Pension plan money has been flowing into the market for years; this is nothing new. The total amount of money put into the market over the last few years does not come close to the increase in the market capitalization. The main reason stock prices are where they are is the increase in the premium paid to own stocks, and not an increase in the value of the companies. The Wall Street pros and company insiders know this, and sooner or later they will dine on the resultant bear market road kill. Afterwards, new guests will be invited to the party. Next time you are invited to dinner make sure that you are not part of the menu.

Terry,
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