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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: pater tenebrarum who wrote (17056)	6/12/1999 10:10:00 PM
From: Vitas	Read Replies (2) \| Respond to of 99985

Heinz, re valuations valuations, per se, in my opinion, have nothing to do with it. They have something to do with it, in the sense that they are ahead of themselves, but that does not mean that they will return to the norm. A simple analogy: Let's suppose that it is announced that a major metropolis will be building a new railway through one of its suburbs. Prices shoot up in anticipation, from 150k by 50-75%., because once the railway is finished, landlords will be able to command much higher rents because of the convenience for renters. Then, a few years later, they announce that there will be a major construction delay. Do prices come back down to 150k, as if there were no new railway for that area on the way? I think not. There is a pullback in prices, because certain people cannot deal with the carrying costs, and the delay in implementing rent increases, but the eventuality remains priced into the market. The market will get a whack, but it will not in this 40 year cycle go back to what reality used to be in the old days. I think Shark's major up trendline at 8800 or whatever holds. Vitas

To: pater tenebrarum who wrote (17056)	6/14/1999 1:07:00 PM
From: Trey McAtee	Read Replies (1) \| Respond to of 99985

heinz-- well, when you have the ability to raise rates, its pretty easy to say the market is overvalued<G>. at any time you can make it overvalued. what i am looking at is inflation adjusted. growth still wins, but at a price. i'll be honest, there is not a lot i am buying for LT portfolios now. who knows what the future will bring. right now however i still think there is too much nervousness that IMHO is unjustified. the market trades in advance of fundamentals. i would disgree... i think more than anything bonds are trading on FUD, and to me this is just as reckless as buying because it always goes up<G>. bottom line... i dont see a case for higher rates. maybe 25 BPs on fed funds, but not too much higher. companies have no real pricing power, commodoties are performing exactly as one would expect given a non inflationary environment, and wage pressures seems higher but are they really? thats just the domestic economy... most of the world is still pretty much a basket case where sucking out capital would not be a good idea. regardless, you get into the whole BOP thing again. what the hell are higher rates going to do to it? still too many questions to be answered. you know, even if they dont move now this will continue... at what point do things get out of control? 6.5? 7? at what point does the fed actually have to drop rates to get the speculators to stop? thats what has me interested at this point. good luck to all, trey