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To: UnBelievable who wrote (28194)	10/13/2000 6:08:34 PM
From: RocketMan	Read Replies (3) \| Respond to of 436258

There is one very big problem. There is not enough money to continue to enable to bid up the price of a stock at a rate that is totally unrelated to the rate of real goods and services which the company can be expected to produce now and in the future. That is a sweeping statement. Don't confuse the no-earnings dot coms with the knocked down solid companies that are going through cyclical downturns. Take a look at intc, for example. Its p/e is now 27, with a 16% growth rate over the last five years. For a growth stock, that compares favorably with the s&p average PEG of 1.7. Even if earnings slow to 12% or so, a heck of a downturn, its PEG would still be reasonable with the rest of the S&P. Now, with boomer retirement money remaining invested for another 8-19 years at least, I think it is premature to say that money can't keep up with prices.

To: UnBelievable who wrote (28194)	10/13/2000 8:50:33 PM
From: TheStockFairy	Respond to of 436258

<In addition, even though some companies have attempted to explain their poor financial performance because of the strong dollar the impact on corporate performance would be significantly more adverse with a weak dollar. A significant portion of corporate profits are based on securing the various elements of production in foreign markets. The US imports much more than it exports. The affect of higher costs would dominate any additonal sales which might result if the dollar were weaker.> 1) I would think that the US imports more items from other countries due to the comparative advantage of the foreign country. Which, of course, takes into account labor costs. 2) If costs rose significantly enough, domestic manufactures would step up to compete in volume on the market. yes, we probably would pay more for goods but consume less. now would that raise our GDP? 3) If the dollar weakens, we would buy less Toyotas, Sony's and Panasonics. We would also probably buy less GM cars. Basically, we would enter either a recession or at the least slow the US growth rate. 4) If we buy less foreign goods, we are going to have an impact on the economies of those countries. Possibly causing other recessions or economic downturns. 5) Do I really see the increased money supply as a problem? No. I think that when we are really up shit's creek the FOMC will rectify the situation using open market transactions. I don't know how far up shit creek we have to be, but it will all get worked out within a year or two IMO. <no way to prevent the extra dollars from exiting the stock market, and being used to bid for real goods and services> That is a spillover benefit/detriment of Open Market transactions. The fiscal policy is not aimed at controling money supply, it is aimed at manipulating the fed funds rate by using the purchase and sales of bonds. Actually, when the bonds are bought back from the commercial banks and the money is deposited back into the commercial bank, the problem is the money multiplyer that is producing the majority of the excess $$. That money is spent on capital goods, which in turn puts the company into debt, but also raises it's assets and output. If output is raised in non-inflationary times, the stock price should go up, if prices are remaining stable or rising (they are rising now as evidenced by the CPI and the PPI) So, my point is, yes creating liquidity is a spillover benefit, but that is not what the FRBOG is trying to accomplish. <Stocks are not going back up because there just is not enough money to continually grow stock prices at the rates expected. No matter how good the technology, leadership, or possible or necessary infrastructure buildouts.> We were in a mania. I don't see anyone around that was saying it wasn't a mania. Stock prices will grow somewhere along the lines of the company's growth rate. I would say that since so many $$s are rolling into the market every month, we should see a bit of cushion on top of the traditional P/Es. Also, there always has and always will be momo stocks. If you don't like em, short em.