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.

Technology Stocks : Softbank Group Corp -- Ignore unavailable to you. Want to Upgrade?

To: LOGAN12 who wrote (5445)	8/5/2000 8:39:06 PM
From: ghengis2	Respond to of 6020

You said it, Linda. There is nothing more gut wrenching than the pits of negative market sentiment, especially when it regards assets in one's own account (except, perhaps, being heavily margined to those assets). The scariest part of it is that it appears things cannot improve for at least a month or so as the "margin settlement period" expires, the Japanese fiscal half year comes to an end and the US mutual funds do their year end tax selling. Last time I remember seeing a market this unhappy was in the Fall of '97 and again in '98, and each time things hit bottom just as the analysts confidently established that everything had to continue downward for another couple of months because the then prevalent drivers of market sentiment had to live out lives of known minimum duration, before which recovery was impossible. The last interest rate driven event of this magnitude I recall occurred in 1994 and terminated in the Fall of 1994 through Spring of '95. Until the Fed failed to raise again at the first opportunity in '95 everyone continued to proclaim an ongoing bear market existed. Japan and the US are different markets and it is impossible to predict either's further moves based on past history. Japan's current political and financial crisis of confidence may continue until the last of its ailing corporations have gone belly up and the resulting insolvencies cause huge unemployment. This could always be the beginning of a new Asian crisis. I seems the dire scenario is unlikely to unfold. As far as I've been able to tell, Japan has an enormous current account surplus, one of the world's highest savings rates and some of its lowest interest rates, and corporate earnings are currently rising in excess of 10% annually. Its sclerotic regulatory schemes have been revised to facilitate restructuring, and the unwinding of corporate crossholdings is but one example of how well the process is working. And it's more likely that most Softbank induced margin debt was called and settled months ago. I'm more concerned there may be a big short position out there weighing on the stock currently than that the ghosts of February's excesses are causing the current selling. (Friday's US trading of SFTBF totalled over 68,000 shares, more than double any recent volume, most of it on the way up, as far as I could tell). I think there's still so much strength in the US economy that the Fed should raise rates this month, preferably by 50 basis points. A hike of that size would put an end to any fears of further rate increases and permit the markets to begin another move up. 25 points is more likely and will create ambiguity as to the Fed's stance, and IMO this is the greatest ongoing risk to the markets both here and in Japan. If US growth is credibly shown to moderate between now and the FOMC meeting maybe the 25 points will allay any remaining fears and things will improve for stocks. But, in any event, I think the fact is, as Barron's recognized, sentiment is as bad as it can get in Japan, and this state of affairs always exists nearer to the bottom than the top of a market, for all practical purposes. That analysts feel they can predict the extended duration of this bad karma is a trailing, not leading indicator of the market slide. This anxiety is what usually causes the blowoff, panic selling often needed to end a decline. IMO, it's a better time to be looking to buy than to sell.