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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: limtex who wrote (27716)	12/29/2000 6:41:10 PM
From: locke_1	Read Replies (1) \| Respond to of 65232

Limtex my friend, I have no quarrel with your view that the Fed blew it by raising rates too high and then did not reduce them for too long. It remains to be seen if their procrastination leads to a recession or a hard or soft landing. But whatever the case, it is undoubted in my mind that we will get out of this and that their will be a recovery - probably a strong one - the only question is time. When the Fed raised interest rates in the 1994-95 period, the arguments put forth were almost the same, yet we not only recovered but scaled heights never before seen within the next year or so. I certainly am not saying that the NAS will hit a new high next year, but that it will within the next 2 is fairly probable, assuming that the Fed. reverses its tightening. You underestimate the resilience of the human spirit and the role hope plays in it. As far as the Fed targeting the NAZ, well ask yourself why the Naz got to such a high valuation in the first place. At that time no one was complaining about how the Fed had created a bubble (except for the bears who'd gotten creamed of course). Then again, everyone was talking about how the Naz and the tech stocks were immune to the business cycle and high rates. Well, they weren't. It is obvious in retrospect to look at that period and say that it was a massive bubble now. That was why they got hit so hard and disproportionately. Raising rates is a fairly blunt instrument that falls across all sectors of the economy. Yet the Dow and the S&P aren't even in a bear market much less a crash. The NAZ got inflated rapidly and just as quickly got deflated. Perhaps it was all the Fed's fault - they injected too much liquidity due to the Y2K and then had to pull it - and most of that money went into the techs - with the consequences that it got overinflated and then crashed. That's my opinion anyway... I'd rather look for some rational basis and learn from what happened than assign the Fed and Greenspan with some nihilistic motive targeting the stocks that I invest in. They made two blunders. I'm hoping that they don't make a third... Regards...