Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Boca_PETE who wrote (9584)	10/31/1999 9:58:00 PM
From: Justa Werkenstiff	Read Replies (2) \| Respond to of 15132

Pete: Re: "Do you place any value on the "three steps and a stumble rule" regarding FED rate hikes ?" I think this rule of thumb applies to the discount rate. We have only had one hike with the discount rate so far. I would watch this closely along with the bias come the next Fed. meeting. Nobody has talked about the discount rate yet. A rate hike now is less expected by the stock market now than it was last week IMO. However, I think the market will not correct below the prior lows plus or minus a few percentage points with one more hike by the Fed. so long as the market concludes this the last one in the foreseeable future everything else being equal. Remember, the three steps and a stumble rule even if applied to short term rates should not be a factor because the market see the Fed. as merely taking back the three rate eases it gave last Fall. The market then expects the Fed. to walk away because of Y2K. That is silly because the numbers will still rule. Moreover, if we get the milennium melt-up as Tom Galvin has called for, does anyone think the Fed. will stand by and do nothing? This was a paltry correction. No real fear in the market at all. NASDAQ did not do squat. Past earnings were the focus. The correction has been mild as Brinker stated today. Ten day P/C is now up to a complacent .56 with the S & P trading at 25x Brinker's next years earnings. Good grief, I don't want a piece of that action even on a DCA basis. The valuation considering the risks is not favorable. I would rather take individual stocks over the SPY or the QQQ. Now if the market believes there is more tightening to come at some point, it will have problems going forward. We should get a stumble as you suggested. But a true stumble is with the NASDAQ leading the way down. None of the hybrid crap. Some nets were starting to crack last week and things were get real interesting and then "kaboom" we had this huge rally. Interesting that we had the same kind of rally at the end of October in 1994 and we went back down to retest in November. Re: "With the more volatile new stocks in the DOW starting tomorrow, do you think any stumble (if the FED hikes rates a third time) could be more than expected as a result of the new DOW index ?" Yes, especially if Microsoft gets a bad decision from the justice department and/or computers sales are softer than expected and Intel takes a hit. The DOW is the headline number and it would be interesting to see the reaction of the investing public if it broke and closed below 10K.