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

To: Matthew L. Jones who wrote (30035)	10/15/1999 7:05:00 PM
From: LTK007	Read Replies (3) \| Respond to of 99985

Greenspan is under 24 hr secret service protection,I can see why,this let's all blame it on Greenspan is the ultimate is BS----if the thread degenerates to a bash Greenspan debacle,it will be utterly worthless.That's is my very strong opinion.Max90

To: Matthew L. Jones who wrote (30035)	10/15/1999 8:03:00 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 99985

Matt, it is untrue that there were no stock market crises before the Fed came into being. to name a few, there was the panic of 1858, the collapse of the South Sea bubble in the 18th century, the crash of 1873 and the panic of 1907. they were all accomplished without the helping hand of the Fed which was founded in 1913. btw, J.P. Morgan , who was instrumental in the birth of the Fed, and his banker friends bailed the market out in 1907 and the need for a Federal Reserve "lender of last resort" system was recognized due to this very panic. history aside, i am also of the opinion that the Fed has done more harm than good during the decade of the 90's by allowing money supply growth to get completely out of hand. the result is a credit, asset and derivatives bubble that has gotten so big that it seems afraid to raise rates in case that leads to a bursting of the bubble. clearly the Fed wants to avoid taking the blame for bursting the bubble, possibly due to the fact that it was almost stripped of it's wide-ranging powers in the aftermath of the '29 crash. imo, the Fed should be abolished on an experimental basis and credit creation left to the free market. i agree fully with you that the Fed's meddling is harmful. however, AG's remarks about the stock market were simply a somewhat opaquely rendered version of the truth. risk premiums HAVE disappeared, and whenever they have done so in the past, risk assessment models have ultimately failed. thus it would be prudent if lending institutions took precautions for just such a failure of their current assumptions and models. what happens if such precautions are not taken can be seen in post-bubble Japan, where the banking system has yet to emerge from the crisis brought on by the surprise plunge in asset prices. regards, hb

To: Matthew L. Jones who wrote (30035)	10/15/1999 8:28:00 PM
From: JDinBaltimore	Read Replies (1) \| Respond to of 99985

Bravo, And the "TEFLON MAN" leaves office with an impeachment, and a Stock Market Crash to add to his resume'. JD

To: Matthew L. Jones who wrote (30035)	10/15/1999 9:48:00 PM
From: Greg Jung	Respond to of 99985

Gee thanks for the lecture. Now I understand. You know a lot. NOT !!! The funniest part is where you say PMCS, SUNW, MU are " those which we all know will continue to make money, no matter what." ROFLMAO !!!!

To: Matthew L. Jones who wrote (30035)	10/15/1999 10:10:00 PM
From: Dwight E. Karlsen	Read Replies (1) \| Respond to of 99985

Matt, re AND WHACKING THE WHOLE MARKET WITH A VERBAL BSEBALL BAT, HE IS ACCOMPLISHING THE VERY THING HE IS TRYING TO PREVENT. I disagree. As I posted a day or two ago, A.G. had the same type of speech a few weeks ago, to a group in Jackson Hole, WY. He even used the words "bubble" and "sharp changes in investor sentiment". Nobody cared then, so how is it now A.G.'s fault that other ppl decided today to start paying attention to what he was saying? Was it Ballmer's fault that ppl sold MSFT stock? Stocks have ALWAYS gone up and down, up and down. This is nothing new here, except that today, more ppl at once chose to sell than other days. It's nobody's "fault". It's just what ppl did.

To: Matthew L. Jones who wrote (30035)	10/15/1999 10:15:00 PM
From: dennis michael patterson	Read Replies (1) \| Respond to of 99985

Matt, a lot of responses? I cannot see anything in your reasoning which can be considered faulty. Greenspan is acting like a 3rd world dictator who bans short selling. And I am in those gloamor stocks and intend to continue trading there. As you so correctly point out, that's where the money is!

To: Matthew L. Jones who wrote (30035)	10/15/1999 10:44:00 PM
From: Lee Lichterman III	Read Replies (2) \| Respond to of 99985

First I wasn't trying to trash you and apologize if it seemed personal. I know you have posted the problems with this market along with us in the past. I do still have to disagree on a few points though. KO, DIS and the others you implied were not bloated stocks I would disagree with strongly. They have PE ratios of 39+ and 34+ respectively as of today's close which I would have to say is FAR from realistic considering they are not new start ups. KO is in almost every market already and it is sugar water not a cure for the common cold. DIS is losing money in everything except thier theme parks and faces increasing competition from Universal studios etc. but this is not that important a point. As far as using a baseball bat to hammer all stocks equally, this weeks declines were about 6% for the major indexes DOW, SPX etc and only 3% for the RUT and .7 on the AMEX. The small caps received only half of the punishment and though many of them are value plays, there are plenty of speculative .com companies that are over valued there also and I "assume" they were the ones that received most of the damage. I do agree with you that the money chases the fewer stocks based on perception but I don't feel this is entirely due to the fed making the market nervous. I would contend that the majority of this was actually caused by the creation of the bubble itself. The market moved away from "value play" and "investing" long ago and became trading. I will be the first to admit that I tried buying value when I first got back in following my divorce and quickly realized it didn't work anymore. I switched to TA based semi Momentum style plays based on a trading style versus an investing style because it worked. Just like Dennis, we know this is not what the market was intended to be, but it is what makes money so we adapt. Is it right? No but it is the only way to play just as long as you don't forget, someday this will end and when it does, I won't feel sorry for anyone who fools themselves into thinking it is anyone's fault but thier own. It is in the best interest of the market to correct to realistic values where sound companies with good leadership, money making abilities and a bright future are rewarded for success and not the companies that can best hype thier stock and get the momentum roller coaster going up to attract those of us that latch on for the ride using the greater fool theory knowing we are over paying but counting on J6Ps to buy it from us at the top. As you said, this is a Man's game (figuratively speaking ladies) and when the house of cards tumbles, I won't blame AG, I will blame those that would not admit to themselves that this market is almost double over valued and it all had to end sometime. Those that wan't to blame others for thoer errors are the boys IMO and the men will belly up and either be out or pay the price. Unfortunately the bubble has become so large that you are right in thinking that the end could create real economic problems for the country as spending grinds to a halt starting the ball rolling the other direction. Slowed spending because J6P suddenly feels poor will mean he won't pay for a truck what he spent for a house 10 years ago. This in turn will cause massive layoffs as GM just promised 50% pay increases to thier labor force (which is not inflationary <g> ). AG has his hands full and I would not want to be in his shoes. He needs to deflate the bubble without causing a total collapse in the economy. When he tries to be easy and not let all the air out at once, Abby and the other hypsters get on the tube and runthe market up another 30% on lower earnings. Last year he did have to lower rates not because of LTCM but to increase spending in the US so we could absorb Asia's exports to get them out of the gutter. This was the plan and it worked to a degree. Unfortunately, much of the same easy money went to the lottery we call a stock market instead of just Asian imports. This spring he couldn't raise rates back up because we were trying to save South America the same way. Ag saved the world at the possible expense of the US. That is where we are now. AG saved the world and now he has to save us. The jury is still out. He will either go down in history as a scab or a hero. Good Luck, Lee

To: Matthew L. Jones who wrote (30035)	10/16/1999 12:21:00 AM
From: Jacob Snyder	Read Replies (2) \| Respond to of 99985

re: market leadership: Look closely at how the different averages have been performing lately. For the most contrast, look at Nasdaq 100 vs. Russel 2000. Surprise! The big cap techs are losing relative strength. You lost credibility when you listed MU in the group that "we all know will continue to make money, no matter what." MU has lost money 5 of the last 6 quarters. When Greenspan speaks, he is either ignored, or the market overreacts. The direction of overreaction depends mainly on the market's mood before he speaks. As I posted a few days ago, when talking about too-easy mortgage lending standards, the market is capable of ignoring the Fed for years. Why yesterday's warning was taken to heart, when the same thing said 2 or 6 months ago causes no reaction, says a lot about the market, and little about AG. I think we are in the twilight of the era of big-cap-momentum-investing. My portfolio has tripled in size in the last 3 years, because I've been almost 100% in the CSCOs and INTCs and AMATs. But I'm bailing out of them. Sure, CSCO is a great company. But it's not worth 100 times trailing earnings. I sold CSCO and bought CMH lately. CMH has a history of reliable earnings growth, every bit as good as CSCO. But it's a mid-cap, and a non-tech, a mobile home builder (the ultimate un-sexy non-internet industry), so it has a trailing PE of 8. It takes some very elaborate mental gymnastics to decide that a PE of 100 is safer than a PE of 8. Small cap nontechs have been going down for so long, that momentum investors expect them to keep going down, no matter what the fundamentals say. But that can't happen. They can't reach a PE of zero. Large cap techs have been going up for so long, that momentum investors expect them to keep on going up, no matter what the fundamentals say. But, again, that can't happen. They can't reach a PE of infinity. When a trend has continued to the point of absurdity, and is far outside its historical range, it's time for the trend to change. I think the time is now. At this point, I'm not sure there is anything the Fed can do without causing a lot of pain. The signs of approaching inflation are becoming overwhelming. He can ignore them, and wait till inflation actually hits. The long bond interest rates will climb, and force his hand. Or, he can stamp on the brake now, ignore Y2K, ignore the political implications of raising rates into an election, cause a sharp contraction in consumption, and probably not get reappointed. Either way, the market direction is down in 2000.

To: Matthew L. Jones who wrote (30035)	10/16/1999 3:35:00 AM
From: Berney	Read Replies (1) \| Respond to of 99985

Mat, I presume you garnered the response anticipated. Frankly, Captain Jim pointed out the issue a long time ago. John Bogle created a 90's, and possibly beyond, equity market based solely, solely, on liquidity. We'll maybe! Hello, it works both ways! I will respond that it is an ROE based market. How few will comprehend what ROE even stands for. Mr. Buffett, (I recognize the great investments in G, KO, and MCD may show a flaw) has been saying for some time that these ROE rates are absolutely unsustainable. I stated before, I believe, how simple investment math is. It relates, as pointed out by Einstein to only 3 factors: Beginning principal, Investment Return, and Time! The problem for the depression children is that while they learned that E=MC2, or whatever the formula is, they never learned that there is a reason that hearses don't have luggage racks. Mr. G is a product of that era! While I've re-programmed myself as a trader, I believe that the lowly FA will rise again,. It is simply part of the long-term equation. I refer to it as the Peter Principle (in honor of M. Minuit). All excesses, particularly those of a financial nature, will resolve themselves. The only question, as Mr. G points out, is when. I thought it would be 10/26; now it looks like 10/19. If you are long. say prayers for IBM. Berney

To: Matthew L. Jones who wrote (30035)	10/16/1999 8:20:00 AM
From: stockycd	Read Replies (1) \| Respond to of 99985

Matt, Then my position is this, AG should have not lowered rates last winter until the effects of the Asian crisis showed up on the US doorstep. I realize that could have and would have happened but aside from the Asian crisis, those rate hikes were purely a result of panic on Wall Street and the LTCM ordeal. Heck, I say he should have let it resolve of it's on direction. We'd be better off now. Trust me, nobody will buy MSFT when it gets to $400 a share! No. But they'll buy it after 4 splits and its only $80 a share. Matt we need corrections to wring out the speculative excesses in this market. We have to also realize that AG sees inflation months before we do and the reason we haven't had any until now has been the action of the Fed over the last 10 years either by doing nothing or doing rate adjustments as needed. They have also managed the money supply, liquidity, ect. BTW, I don't think most traders (myself included) care which direction the train moves. As long as it moves one way or the other so we can make some money! These last 3 weeks have been good-to-me:') Take care, (theres another hurricane coming) Chris