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To: Tom Trader who wrote (37123)	10/17/1999 12:47:00 AM
From: Patrick Slevin	Respond to of 44573

<the continuous in-flow of funds from retirement funds> Heard a guy outside the business make the same remark today......I always do a mental check when I hear that from someone outside. The break that you speculate on, when you mention the external trigger is likely to be a break of a certain level I think. It's going to be that level where people will start to think that their money would have been better spent somewhere else. For example, if the average person is averaged into the market at DJIA 8500 then 8500 is a critical point. I don't know about anyone else, but I've been fortunate to start taking monies out of funds since July. These funds were started in the early/mid 80's. I could put the money back Monday and be well ahead. But in my case it was just disaster planning....what if there is another disaster? I read a book by Lynch some years ago, he was on vacation in Ireland during the decline of '87. He was deluged with redemptions in Magellan. FIDO had to consistently Sell the Market to keep up. Those monies certainly could evaporate in a swiftly dropping market, although I hate to sound like a fatalist. <when the Nikeii was at the 30000 level, it was rare to find anyone who could see it doing anything but continuing up. ............ ............However, as I have said previously, just because something is over-valued it does not mean that it cannot get even more over-valued.> Yeah, I think the NIK got to over 39000 eventually.

To: Tom Trader who wrote (37123)	10/17/1999 10:24:00 AM
From: Arik T.G.	Respond to of 44573

Tom, >>For that source of funds to end, there will have to be either legislative changes or else there will need to be a sea-change in attitudes that cause people en-masse to refrain from investing their savings in the markets. I don't believe that absent some external trigger that the latter is going to happen. The very long term is not that different from the short term in the markets, only the reasons are different. Same as the market can be overbought or oversold short term, it can be overbought or oversold on the mega scale. It sure can stay there for a long time, but eventually it snaps back, and the very long term rubber band effect is even more pronounced because of the cross connection between the stock market and the economy. IMO the current stock market is not only reflecting the economy but leading it. Greenspan knows that, too, and commented about the households that show negative savings rate because they see their portfolio gains as permanent. AG was carefull enough to faintly hint to his disaproval of that this concept (relying on paper gains for consumption), but anyone that looks at the other side of the coin can see the avalanch that will happen once the stock market cannot cover for the consumption beyond the households' means. It goes like this: 1. The stock market stops producing the now anticipated 25%annual gain (In '99 it would be a miracle to see anything over 10% S&P gain). 2. Used to consuming beyond its means, the average household is eating up its savings, instead of watching them grow. 3. New money cannot be funneled into the market by the households, without lowering consumption. 4. The market crashes. 5. No more IPOs, employees stock options become worthless. 6. Households watch their saving shrink, and decrease consumption to compensate. 7. Corporate profits drop because the overcapacity is now in plain view. 8. The goldylocks psychology reverses, people start worrying for their financial future and change their tastes fundamentally. 9. The rubberband snaps back - depression: high unemployment, deflation, massive shrinkage. 10. Stock valuation reflect discount on corporate assets. 11. Warren Buffett buys quality stocks for a song. It took four years from '29-'33. My guess that this time it would take 5 years. I'm not saying we started on the way down. My opinion is (if 2yk will be benign) that there is one more big rally left (EW Intermediate 5) that could last between a few months and up to 3 years, after the current Intermediate 4 corrects for the rally since 12/94, and brings us to S&P 900 area in December. But when it comes, this would be the greatest economic avalanche of all time. Bigger then the Big Depression, bigger then the South Sea bubble. I see this process as deterministic since 10/97. ATG

To: Tom Trader who wrote (37123)	10/18/1999 8:43:00 PM
From: Chip McVickar	Read Replies (1) \| Respond to of 44573

Tom, In answer to your post. There are numerous factors that have underpinned the economic spurt and market growth since 1982 and particularly from 1988, internally and externally.... We are already aware of these conditions! By the very fact that the baby boomers will continue to work and produce and invest, demands that these markets will continue to have money. Coupled with this the largest transfer of personal capital in the worlds history is taking place as boomers parents pass along their generational life savings. Nothing short of a "major sea change" in economic vitality will alter these facts. But I believe there is a nascent change taking place and will carry forward over the next 10 years. The economic industrial and service economy lives on growth. It requires growth and that requires new markets to maintain demand for services. This means the developing world must be brought along to provide the new buyers. To fail this new requirement of growth is to end the capitalistic world as we have come to know it. The throwaway culture. Anyway, this favors large international companies with connections to natural resources and the ability to market world wide. Developing companies will require the basic materials to manufacture and enter the modern industrial world and this will increase prices and inflation will be directly behind this demand. The computer driven productivity in this country has just about run its course and here too wage inflation will begin to become apparent. My Best, Chip