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To: KeepItSimple who wrote (66349)	7/5/1999 8:43:00 PM
From: dbblg	Respond to of 164684

>>The market, and nothing else, is keeping our economy afloat. Consumer saving has dropped below zero, consumer spending is at an all time high, and credit card debt is at an all time high as well. The only thing keeping the economy going is the wealth created through the stock market. Repeating this over and over won't make it true. 1. "Consumer savings" is extrapolated from figures on estimated income and estimated expenditures. Short term capital gains taxes are counted as expenditures, but short term capital gains aren't included as income. Skews the figures. Personal savings have trended down somewhat, especially considering how low the unemployment rate is, but the situation is not nearly as dire as the media has suggested. 2. The wealth effect from stock appreciation is dwarfed by the wealth effect from the real estate bubble. There are two components to this, one short-term, and one long. First, the low nominal interest rates last fall encouraged lots of people to refinance their mortgages. Many of them took money out to buy cars, pay down consumer debt, etc. Second--and this is something which I find very worrying, longer term--the capital gains tax rules on primary residences were relaxed dramatically two years ago. Now that people don't have to roll profits into a more expensive home when they sell, a big chunk of that money is undoubtedly entering both the real economy and the financial markets. By contrast, most people plow their stock market gains back into the market. This is not true of company founders, etc., who cash out their options, but that represents a relatively small part of the economy--though I recognize it may look different from Palo Alto. 3. There are irrationally exuberant investors on all sides of all trades in all markets. Both the "AOL Happy Dancers" you cite, as well as the "AMZN grave dancers" will likely get cleaned out if they press their bets too far or leverage themselves too heavily. Last summer and fall I made more money on the short side than I ever thought possible, and began to see 1929 in the charts. There was a week I was short MER, IBM, GE, and LEH. I escaped with modest profits in three (and a modest loss in MER) largely out of sheer dumb luck; I closed everything out before going on a long overseas trip...

To: KeepItSimple who wrote (66349)	7/5/1999 8:48:00 PM
From: 16yearcycle	Read Replies (3) \| Respond to of 164684

Kis, I hate to tell you this, but everyone is not a millionaire. Last night, I went to the demolition derby held at the Evergreen Speedway at Monroe, Washington. They hold figure-8 races, and stock races almost every weekend, and on the 4th they have an excellent fireworks display, which was disappointing this year. The air was so still, you couldn't see the explosions through the smoke that hung there.In any case, there were 10,000+ people there, 9000 who looked homeless. A dentist would have gone nuts looking at all the potential patients. It occurred to me that maybe Greenspan is hanging out at tracks back east, in disguise, and is pretty convinced from what he has seen at these places that folks could use a bit more equity in their accounts. If they have any. My apologies to anyone I offended with these comments.

To: KeepItSimple who wrote (66349)	7/5/1999 8:57:00 PM
From: Bill Harmond	Read Replies (1) \| Respond to of 164684

Not me Kissyputs. I'm under no such illusion. I'm lucky to know that all the world's wealth is tied up solely in Internet stocks. Nothing else has value. The thing I can't quite understand, though, is why Merck and Pfizer are still quoted at a combined market cap larger as all Internet stocks combined. Those bidders must be on drugs...

To: KeepItSimple who wrote (66349)	7/5/1999 9:09:00 PM
From: Lizzie Tudor	Respond to of 164684

I don't get you Kis. You should be thrilled with these inflationary markets (your term, not mine). The reason is because the stock market today is the great equalizer for the high tech workforce, new inventors, etc. You have been around long enough I think... surely you can see that. In the 80s for example there was plenty of wealth around, but accessing it was tough. If you were an R&D manager or just someone with a good idea, there was no way to get your message out unless you played the game with a select set of venture capitalists, etc. There was no Wit capital, and no way to IPO without profitability. The net result of that was that a few (very few) founders and investors of tech companies got rich, and nobody else really did. Engineering was routinely left out in the cold. Even in the real estate market which was appreciating, it was the expensive houses (over 500K, a lot 10 yrs ago) that were going up... the others weren't really... that tells you what was happening at that time, only the people at the top were getting wealthier, and "the top" was a nebulous term. Sure some founders of companies are truly great, Tom Siebel is an example, a true wealth creator, but then you have other people like Jean-Louis Gassee who was more a product of the system and just a bunch of fluff. Since the internet and accessibility of online trading, plus the fact that there is just generally more capital available, things are way more fair. If you have a concept or something marketable you can certainly get the capital you need now and the market will decide if its viable or not, you don't need to go the traditional VC route there are alternatives now. And, as an investor with the same tools available that everybody else has, I feel that I will die wealthier than some of the know-nothing executives I have worked for in my life. It was not that way in the 80s. So what is the problem?

To: KeepItSimple who wrote (66349)	7/5/1999 9:33:00 PM
From: Victor Lazlo	Read Replies (2) \| Respond to of 164684

<< The market, and nothing else, is keeping our economy afloat. Consumer saving has dropped below zero, >> Wrong, kis. The govt's measurements of savings rates are completely antiquated, and everyone knows this. People are saving, just in different ways than they did 30 years ago. Did you know that your statement above ignores 401k and Roth IRA savings plans? << consumer spending is at an all time high, and credit card debt is at an all time high as well. >> So are home equity values. << Here's a question: some point to commodity prices and say "Look, no inflation." But my question to you is this: is there ANY government measured statistic that would EVER show inflation caused by a market bubble? What govt stat shows wage inflation? Look pal, I have been hiring people for my group at work for the last 12 years and it is incredible how much more we have to pay today to get the same level of quals we did 8 yrs ago. You are ignoring the other side of the equation. Victor