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Strategies & Market Trends : Currencies and the Global Capital Markets
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To: Enigma who wrote (1388)3/15/1999 11:11:00 AM
From: Henry Volquardsen  Read Replies (1) of 3536
 
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liquidity, and more importantly liquidity preference, is very strongly correlated with confidence about the future.

Interesting comments about the American boom being under full swing. I was in the Southwest during the early 80s when the Texas, Colorado and Oklahoma markets were in full boom. They were similarly unconcerned about spec building :) I do keep an eye on real estate for signs of overbuilding. Aside from local situations, the national picture doesn't show spec building on par with what we saw in the Southwest in the early 80s......yet.

Yes the boom has to end sometime. And it will end very ugly. In my previous post I mentioned the demographics of boomer saving. My personal feeling is that when their saving ends the fuel will be taken away from the boom and valuations will return to normal. The real frightening thought, however, is what happens when the boomers start selling their investments to fund their retirements. The investment outflow could be as powerful as the inflow and could lead to chronic undervaluations. The demographics are a very powerful force and are global in nature. The good news is that the savings wave is likely to last a while longer. The bad news is that when it turns it will turn for a long time.

Henry
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