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

To: sandeep who wrote (40974)	2/22/2000 4:17:00 PM
From: John T.	Respond to of 99985

sandeep writes: Raising interest rates to destroy the stock market has never been done before. The effects are unpredictable since there is no precedent. This Fed is too arrogant... Its been done before. It was done in 1929. The final 1% rate hike crashed the market.

To: sandeep who wrote (40974)	2/22/2000 4:20:00 PM
From: Crimson Ghost	Read Replies (1) \| Respond to of 99985

I think the main reason that value stocks are so cheap is that everybody is dumping them to buy absurdly priced NASDAQ issues that have strong momentum The NASADAQ bubble is severely damaging the rest of the market.

To: sandeep who wrote (40974)	2/22/2000 4:27:00 PM
From: Imran	Read Replies (1) \| Respond to of 99985

"what do you make of the ridiculously low valuation of many companies in the DOW ? " Which DOW companies do you think are cheap? "Raising interest rates to destroy the stock market has never been done before. " What do you think caused the crashes of 1929 and 1987 ?

To: sandeep who wrote (40974)	2/22/2000 5:00:00 PM
From: The Ox	Respond to of 99985

I'm of the opinion that the FED is not raising rates because of the NASDAQ/tech valuation issue, rather they are focused on and concerned about the very robust GDP growth. 4.5% to 6% GDP growth shows a hot economy and that's where the FED's rate increases are aimed. They will attempt to jawbone down an inflated market but I don't believe they will target specific markets with interest rate hikes because of the effect the rate hike will have on the economy across the board. I don't believe that interest rates are that far out of line at the moment. Inflation looks like it's averaging about 2% so current rates don't look that 'off' to this observer. I'm curious how others view this issue? As far as DOW valuations are concerned, the street has been doing it's normal lemming thing, that is following the mo-mo gang. Right now that's in communications, technology and bio-tech. Not too long ago we saw over-streched valuations in the pharms and financials. We've seen those sectors take a beating. Before that we had over valuations in the oil sector and it took a massive pounding before it rebounded. The money will pour into the DOW stocks when investors are looking for safety. Lately, investors have been looking to high growth and high risk rather than safety and income. These, I believe, are normal stock market rotations. As long as the immediate short term future is clouded by the explosive growth of the internet and the tech sector, there will be massive 'bets' placed on faulty vision. Those who over-extend, whether on margin or by placing too much money on the 'wrong horse', will pay the penalty. JMO, Michael