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Strategies & Market Trends : MDA - Market Direction Analysis

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Nov 14 4:00 PM EST

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To: James F. Hopkins who wrote (4296)	1/20/1999 8:25:00 AM
From: Terry Whitman	Read Replies (3) of 99985

Some simple thoughts from a simple mind: When I read of Clinton's SS investment proposal yesterday, a few thoughts crossed my mind (Of course I'm a world class skeptic, but hear me out). Number 1) Can you believe anything he says? Number 2) Will there actually be a surplus in the future? Who can really predict the economic future? Nobody I know. Number 3) If there is indeed a surplus to invest, the amounts we're talking about would have a trivial effect to our huge market cap. Consider: <<WASHINGTON, Jan 19 (Reuters) - President Bill Clinton will propose transferring the bulk of projected budget surpluses over the next 15 years, more than $2.7 trillion, to shore up the Social Security System, the White House said on Tuesday. In his State of the Union speech, Clinton will call for dedicating 62 percent of the surpluses to the retirement income system, with 20 to 25 percent of this sum being invested in the private sector through the stock market.>> A little 7th grade math will show the actual effects of this plan, IF it happens- 62% of $2.7 Trillion over 15 years is $1674 Billion. 25% of that amount is $418 B. If individuals invest half of that in the stock market, that leaves $209 Billion. I believe the current market cap of the U.S. markets is around $10 Trillion. Thus the entire effect would be 209/10,000 or a 2.1% increase to the markets over 15 years. Certainly not a lot to get excited about- but most current market investors probably flunked 7th grade math <ng> TW

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