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Politics : Ask Michael Burke
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To: Knighty Tin who wrote (3501)10/25/1996 8:22:00 AM
From: valueminded   of 132070
 
Mike:
Couple of more questions. You felt that kellogs was not a good short candidate as it had already fallen. I did not short it but let me give you my thoughts as to why I think it is in trouble:
rising grain prices
price wars in cereal boxes
tendancy of consumers to buy the generic brands over the national
label brands i.e. If you shop at Krogers, why pay a premium for Kellogs corn flakes when Krogers corn flakes will do just as well.

I am a novice investor at this point but those are my thoughts on Kellogs. Will be interesting to follow over the next few months.

Another thought, it seems to me that the stock market decline and the recession will be coincident - this time around. Although it is difficult to say, I feel (IMHO) that the large expansion of consumer debt, and the increase in demand for credit, will usher in a recessionary period. i.e. I do not think wage increases are keeping pace with the debt expansion. When this happens, the fed usually reduces rates - but I do not think they will be able to reduce rates without causing foreign support for our bond market to decrease. At any rate, I seem to go in circles with this arguement and would appreciate your thoughts in this area. - especially your reasons for arriving at what you feel the direction of the market will be over the next year.

thanks
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