Roger's 1998 Short Picks Message Board

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Strategies & Market Trends : Roger's 1998 Short Picks

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To: Timoteo who wrote (16977)	1/13/1999 9:13:00 AM
From: Oeconomicus	Read Replies (2) of 18691

I just hope the internuts don't suck the whole market down... I hope you are right about the longer term effect. Remember, though, that the internuts represent a couple hundred billion of market cap. A sharp drop, resulting in margin calls and all, can have a chilling effect on investor sentiment - even among those of us just watching - and could cause some problems for brokerage houses as well if the drop is sharp enough. Also, considering that even the Dow is now at a 25+ PE, there's lots of room for contraction in blue chip multiples. Personally, I think Brazil is just the slap in the face that is waking people up from their exceedingly happy dreams. Brazil will recover from its recession, but only if they bring interest rates down to where they aren't choking the life out of the economy. They can't both bring rates down and keep the currency up. A change of bank chief is just part of the policy shift. The real <g> problem here is not Brasil, but rather excessive valuations and unreasonable expectations among investors. JMO, Bob

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