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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: GROUND ZERO™ who wrote (45472)	1/10/2000 12:09:00 PM
From: Jon Matz	Read Replies (1) \| Respond to of 94695

AOL a company with a 200 day moving average (200 dma) of about $20 per share, buys a company with a 200 dma of about $42 for about $115 per share. I was certain that the price of AOL would fall, but noooo! The price is rising! Speculation has caused stocks to have values completely independent of the dollar. They have become the currency of choice and the value placed on them has no basis whatever in reality. Inflation as a indicator of monetary value has been delinked from reality by the absurdly inflated value of stocks. When the adjustment is made and it must be made, to bring the dollar into balance with the value of stocks it will cause a shock heard round the world. It will end in tears. For either the value of the dollar must fall dramatically by way of inflation (read printing more currency without corresponding value) or deflation of stock values (read a vast redistribution of wealth). Neither of which can be an action taken without global consequence of disaterous proportion. What I'm trying to say is that either stock prices are pegged to the value of the dollar, which doesn't seem possible, or that the dollar must be pegged to the value assigned it by stock values. If TimeWarner was worth say $100 per share and AOL pays in stock $150 per share and the value of AOL stock is pegged to the dollar, then the value of the dollar dropped by 33% which is inflation rate of 66%. Of course this transaction represents only a fraction of the total stock/dollar equation, but it is excellerating at a phenomenal rate across the markets. Do you know how much the equation has already impacted the equation? I don't pretend to know, but I wouldn't be surprised to find that over the past two years, the real inflation rate nearly matches the rate of increase of the markets themselves. Certainly it is double digit! I'm sure this is a very simplistic view of events, but believe it does illuminate things somewhat. What do you think? Thanks, Jon