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

To: John Madarasz who wrote (61211)	10/22/2000 11:48:36 AM
From: UnBelievable	Respond to of 99985

I Thought It Was Interesting That The Sunday New York Times seemed to ignore on its front page, and play down in the business section the recent volatility in the markets. I don't know what is going to happen in the next few weeks. But it does seem that the recent volatility in the equity markets, with the price of stocks varying significantly from day to day, and hour to hour, does not bode well for the market. It seems that to the extent the prices of stock had some basis in objective economic criteria such swings would be unlikely to occur. In my mind the variability itself is a clear indication of the bubble nature of the current market. While it may not be apparent currently, the stock markets ability to increase, is ultimately limited by the ability of the companies and the economy to grow. This underlying real economic growth is facilitated by efficient markets which allocate capital at a cost consistent with the risk/reward potential of the investment. Market based volatility will increase the cost of capital for all companies. The current departure of the pricing of individual equities from a return model, to an equity based demand model, is also making the securing of capital by many companies involved with capital intensive infrastructure development industries (perhaps with the exception of the broadband communication infrastructure)considerably higher as well. The extent to which we as a country have chosen to bury our heads in the sand concerning the implications of the current market and economy and focus on our increasing 401(k) and IRA balances is troublesome. I spoke to a few different people early last week who said they were just waiting for a little bit of a bump back to get out of equities. I wonder how many actually utilized the opportunity which was presented, and how many chose to wait just a little bit longer a get just a little bit more of their recent losses back.