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To: JRI who wrote (162021)	10/11/2000 10:17:36 AM
From: GVTucker	Read Replies (2) \| Respond to of 176387

OTOT, JRI, RE: the Nasdaq drop I don't really see the Fed caring too much, nor should they. Then again, I thought that Greenspan talked about the stock market a little too much on the way up; fortunately it didn't drive his monetary policy, and he pretty much just tried (unsuccessfully) to jawbone the market. A couple of thoughts: First, the liquidity that has been drained by the Fed was only the excess liquidity that the Fed provided for Y2K. If you normalize out the Y2K effect, the monetary liquidity is just fine. If the Fed hadn't taken this excess Y2K funding out of the market, the inflation risk would have been much, much higher. Second, this drop by the Nasdaq isn't that unusual, and certainly not the worst in history. Remember, the 90's are a weird freak of nature not likely to be revisited. Looking farther back, the market has easily been this volatile. From its peak, the Nasdaq Composite Index has fallen a little less than 36%, in about 6 months time (more today, of course). The worst drop of the 90's was about 30%, in 98. The 80's saw 3 drops of more than 30%, with a 34% decline in '89-'90. If you want a really painful decline, go back to the 70's. It wasn't a quick drop. It was a painful, slow knife in the back--and the knife had a dull blade. The Nasdaq Comp declined 60% from Jan '73 to Oct '74.