To: Andrew G. who wrote (64306 ) 12/15/2000 11:22:23 PM From: Zeev Hed Read Replies (1) | Respond to Andrew, there will be a number of sources for renewed vigor, but I agree that in general we will have a relatively lengthy period of a broad trading range (I still hold to my thesis emulated here last April of a 5 to 7 years range of between 6000 to 13,500 on the Dow and 1900 to 5300 on the Naz). Right now, if we do go into a real recession, it's end might be induced, like many other recessions before, by over reduction of inventory, by too much cutting of excess capacity, writing down of inefficient assets etc. You are already seeing the beginning of this process, in Korea, Daewoo is cutting between 30% to 50% of its work force. In Taiwan, some of the fabs are delaying new construction, INTC delaying by a year the opening of its Irish fab, MU still mulling ()for year number five) the opening of its Lehi fab, etc. Once a new balance is established, then the fuel for another growth spurt will once more be liquidity, and I believe that eventually this liquidity will be released, if for no other reason that financial assets will become more "rationally priced". For instance, if the fed's decide early next spring to lower interest rates (only after they assure themselves that no dangerous fiscal policies are planned by the new administration), relative value of stocks (by then another 10 to 20% cheaper?) to bonds will start a movement back into stocks. There are other unlocked source of liquidity, waiting on the side lines. I thought a year ago that more of the Japanese postal system will leak into the financial markets in general (I still do not understand why it has not migrated into higher returns, I am told Japanese savers are "conservative to a fault"), maybe this time this faucet will open up more than it did so far. There is of course the constant flow of cash from 401 k plans that still need to find a home, and if long term treasuries get down under, I would guess, 5%, then companies growing at 10% per year, even if they pay a modest dividend will become attractive again. Just wait and keep you powder dry, one of these days, the sun will shine again, maybe before the next Spring equinox.
