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Strategies & Market Trends : Fidelity Select Sector funds -- Ignore unavailable to you. Want to Upgrade?

To: Mike McFarland who wrote (1896)	6/13/1999 1:25:00 PM
From: gregor	Read Replies (1) \| Respond to of 4916

Dear Mike: I know it is bad taste to ask for an opinion and then offer your own but to keep the conversation going let me say that I do agree that the fall of the big drug companies may be the start of the crack in the dike getting bigger, and then taking down the overall market. I was reading an article in the paper today about the co2 emissions declining, the last decline being the last recession 91-92. I feel that the internet will impact our futures more than we can ever dream. One of the reasons I got out of the energy sector after it's last rise was because of the internet. How so. ? Just think of all the ways that the internet decreases the use of energy. Shopping on line instead of going to the mall. Emailing a friend a hundred times in lieu of driving a few times a year to see them. Looking on line for information instead of making a trip to the local library. A few trips a month less to go to the bookstore, health food store, magazine or newspaper stand; and the list is endless, or the bank, broker, baker,post office, etc. But I do feel that the co2 emissions are being influenced by the internet. Not to even mention leisure and entertainment. Think of the billions of man hours being spent at home on the internet in lieu of other activities. Your comment about long term rates going to 10% over the next several years implies an inflation rate of 7%. That is truly frightening and I do not see anything close to that. After a 45% return on FNMIX since Oct. I bailed out 6 weeks ago because I correctly predicted the recovery of the em. market economies and Japan, and a subsequent rise in worldwide interest rates. The fund was yielding 13% when I got in and less than 8% when I got out. Of course the dollar fell against many of the same currencies at the same time. So what I see happening lately was an inflation scare with the .7% CPI increase in April, and at the same time gold hitting new lows. The war in Kosovo, ending, a shortage of some key building materials, and gas prices moderating. Pressure on wage increases, record low unemployment, and an irrationally exuberant stock market, and the possibility, while diminishing over time, of minor Y2K disruptions.(much of this data conflicting) It's a hard call but I see a major flip // flop . Long term rates will overshoot my initial target of 6.25, possibly after a fed increase in late summer or early fall. The feds will not raise at the June meeting and this will actually disrupt the long end of the bond market more than if they would have. However as, the world economies begin to cool toward the end of the year we shall see a rapid rise in the bond market taking us to new lows of 4.5% by the end of spring 2000. If I am correct, appreciation plus interest on the long bond will bring over a 30% return in less than 1 year. That is why I am sitting on 100% cash now. It is very difficult to try to call the turn in the market while looking into too many windows. Short term I see further weakness in equities, with the possible exception of gold and health care but those two areas I wouldn't begin to make a call on, so I'll stay out short term.........Take care.gregor Week of sharp declines ends with a thud NEW YORK - Stocks fell sharply Friday, extending a dismal week on Wall Street, as investors became increasingly certain that the Federal Reserve will raise interest rates to slow down the robust U.S. economy. The Dow Jones industrial average dropped 130.76 to 10,490.51, down 2.9% for the week. Broader stock indicators and bond prices also fell. The fear of higher interest rates has become so pervasive on Wall Street that traders Friday looked past one strong indication that inflation has not returned - the Producer Price Index rose only 0.2% last month - and focused instead on two less favorable barometers of the current economy, retail sales and consumer sentiment, both of which showed signs of strength.