To: Bucky Katt who wrote (6129 ) 5/16/2000 6:58:00 PM From: Joe Smith Read Replies (2) | Respond to
It seems to me that we are looking at a long-term change in the movement of equity with this much higher cost of money. With rates this high, there is much more incentive to move money from cash waiting on the sidelines into paying off debt. No more taking out home equity loans and dumping the money into CSCO or JAGTX. Instead, we'll be paying off anything with a variable rate and we won't be looking to borrow. Very good long-term, but short term, there is less equity to enter the markets. Also, the lending rates are going to take a bigger bite out of the average person's nut, leaving less for investment. Finally, this will slow down the economy and therefore earnings growth and revenue growth. Although interest rates are of little interest directly to the average high flying tech stock, they do have major macroeconomic effect. If they didn't, AG wouldn't be using them as a tool ( a rather blunt tool if you ask me)
