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Strategies & Market Trends : Value Investing

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To: Ron Bower who wrote (4406)	7/11/1998 12:32:00 PM
From: Terrapin	Read Replies (1) of 78751

"Can we apply traditional investing to this market? I ask this because the IRA, Keogh, and other tax free investing into mutual funds and the current flow of money out of Asia has caused an artificial market." I agree. And Jeffrey has an interesting point to compare our market to the Japanese market. During their bull market and at their highs they had a national ethic for saving and investing. Their post-war generation was going to rebuild Japan in this way and with the help of other factors, succeeded. Our current savings rate approximates theirs thanks to mutual funds, 401k's, and IRAs. Does that mean we will repeat their bursting bubble? Maybe. But they have also maintained an economic system of national patronage and protectionism which has corrupted their large corporations. Their finance system is corrupt and is much less regulated than ours (many hate the word "regulated" so you can replace it with "investor-protective" or some such phrase) with regard to reporting practices. And they are more vulnerable to national demographics because they have very pro-Japanese immigration policies. The US is more likely to hire out of skill than nationality and when the boomers age out of the productive demographic the major corporations will lobby congress to allow more able-bodied workers into the country to take up the slack. This is beginning to sound like a defense of the current market valuation and it wasn't intended to be. My point is that we may not repeat the spectacular bursting of Japan or the 30's due to the system we have in place. I'm still expecting a strong retreat in the near future so I have been raising cash as I mentioned in earlier posts. However, the stocks that I did hang onto (TCOMA, TCIVA, TYC) have recently done so well that my % of equity has increased! Strange market. The only sense that I can make of it is that all my stocks that start with T's have done well and all that start with O's have done poorly! :-) Sorry for the rambling and everything is only my very uninformed opinion (OMVUO!). I'm just a bear that is wondering if he's doing the right thing. John

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