Elaine Garzarelli Message Board

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Non-Tech : Elaine Garzarelli

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To: uu who wrote (182)	1/3/1997 8:14:00 PM
From: Dh	of 292

Addi, I know exactly what you mean. I don't know how many times I've watched Mr. Metz's doom and gloom speak on CNN but I know that without exception it was followed by a rally in the markets. Perhaps he is a closet bull and is buying when everyone who listens to him is selling? One thing that concerns me though is that he recently stated on CNN that he thought the market was "in good shape". This to me is a loud and clear SELL signal. - He does the "Doom and Gloom" act much better. The reason I got on this thread is that I just received EG's "Dear Investor" letter and I wanted to read what others were saying about her. One point that I do think is relavant is that the market is not paying much attention to the price of oil. Every time the CPI number comes out the inflation number which is paid attention to is the "core" rate. The "core" rate does not include energy prices. The price of oil is quite a bit higher than a year ago. Since EVERY product you purchase has oil as part of its production, material, and distribution costs sooner or later the price of the products will be affected by increases in the price of oil. If the prices do not go up then the profits for the company making the product will go down. In either case the affect on the stock market is obvious. Another related point is that the major source of profits from companies has been related to margin expansion. The primary driving force of the margin expansion has been increased productivity. The problem with this is that it is much easier to improve a very poorly run company than a highly productive one. It might sound strange but the main problem I see with the market going higher is that companies are run much better than in the past and there are not enough overpaid workers out there for them to sell products to. There are also not enough overpaid workers left to fire in order to make the next quarter look better. Just my 2c. Regards, David Halyk

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