The Fed is still (as of two weeks ago) up the same tricks. The increase in M1 is truly astounding, given that much of this tends to be swept instantly into accounts that figure as M2 and M3 and disappear from M1. This is hard to interpret. Maybe a desire to hold liquid assets is a sign of growing caution. In any case, the figures presage a much higher inflation rate about 18 months from now--if classical monetary economics mean anything.
bog.frb.fed.us
Although it seems hard to be sure what is happening to money flows in or out of mutual funds until six weeks or so after the fact, AMG is showing a couple of billion out versus three billion or so in a year ago. Probably not enough to signify anything definite.
It does seem strange that some of the brokerage houses are more willing than the Fed to police irresponsible speculation, but thank goodness there is someone to do it. I mean the reports of requiring 100% margin on the Internet/tech stocks.
David Dreman's book, _Psychology and the Stock Market_, shows a remarkably consistent decline of 80-90% for stocks, or any asset, that has been bid up the way Yahoo, Amazon, E-Bay, and other have. Even money-making stocks like Intel can come down 60-70%.
I wish I could say confidently that such stocks WILL decline that much, but I am afraid that all I am aiming at is to increase my own capital that is committed to bearish speculation by about 50%. This would be a normal four years' increase in a long-term equity market, and I would like to have a nice stake to recommit to equities when they are once again at levels that seem reasonable. |
