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To: GST who wrote (115245)	1/13/2001 9:35:52 AM
From: H James Morris	Respond to of 164684

Gst, I want you to point me in the direction of the next greed-actuated investments.<vgb> > January 12, 2001 Even if we go into a recession and bear market this year -- and neither is inevitable -- we have one consolation: Our capital markets are already correcting our problem. What we're going through evinces one of the weaknesses and also great strengths of capitalism. You may have been slaughtered in the stock market last year, but you have this solace: The market was in the process of identifying and then mending a flaw in the system -- excessive greed. As H. Bradlee Perry of Massachusetts-based David L. Babson & Co. points out, "In early 2000, so-called leading analysts at six large Wall Street firms were projecting 80 percent price increases for their favorite technology stocks, mostly Internet issues." But by December of last year, "Those shares had dropped an average of 90 percent," says Perry. Ouch! This happens often in capitalism, particularly in an investment-led expansion. The money goes where the fast bucks are. The money all crowds into one sector. Stock promoters realize they can get rich quick by coming out with a new issue -- no matter how silly -- in some hot sector: The insiders and venture capitalists, who get their shares for 2 cents apiece while the public pays $20, can get mighty rich. The outside investor, of course, can get mighty poor. But there is also a distortion in the economy: The money has been fed into one booming corner, and other key parts of the economy have been neglected. From the mid-1990s on, vastly excessive piles of money, seeking fast returns, flooded into high-tech, and the economists were right there to cheer on the process. It was the virtuous cycle: Heavy tech spending-high productivity-high profits-heavy tech spending-high productivity, etc. As always happens, a couple of things went wrong. First, the companies buying the high-tech equipment got over-leveraged. High-tech capital spending was growing at an utterly unsustainable 20 to 30 percent a year, but the productivity increases that were supposed to keep the daisy chain going began looking more and more illusory -- indeed, impossible for a company with a tattered balance sheet. But there was another part of the post-1995 story: what we were neglecting. We were not investing in utility plants or oil-drilling equipment. California knows about the former problem all too well, and so do some other states. And we all know that the lack of oil-production investment made us dependent on OPEC again, and it is in the process of raping us -- again. But here's the good news. The stock market realized all this last year. As Perry points out, the best market performers last year were the utilities, up 51 percent. Fourth best were energy stocks, up 24 percent. I can't help but believe that many investors realized that in the New Era of the personal computer and Internet, electricity usage would surge, and there weren't enough plants to produce the electricity. Similar logic motivated those who invested in oil stocks. So while technology stocks went down 37 percent and telecommunications stocks plunged 41 percent last year, the system was in the process of healing itself. For most of the 1990s, we had "an investment climate anchored to science fiction," says economist Stanley A. Nabi of New York's Credit Suisse Asset Management. "In recent months, reality has returned knocking on the door," says Nabi. "The bifurcation in the market that had strongly favored new technologies and shunned traditional investments has reversed itself and is now embracing sectors that had been abandoned as irrelevant in an economy presumably dominated by New Age technology." Adam Smith's invisible hand takes time to work its magic. We have indigestion: over-investment and overproduction in areas such as the Internet, personal computers and semiconductors. We have the reverse in key sectors such as utilities and energy. We'll suffer pain from both these problems as we work our way through them. The period of adjustment may cause a recession and bear market this year. High-tech stocks are already in a severe bear market. We may already be in a recession that started in the fall. But as greed-actuated investment imbalances got us into this mess, other kinds of greed-actuated investment imbalances will steer us out -- until some other distortion gets us in trouble again.

To: GST who wrote (115245)	1/13/2001 3:33:19 PM
From: Sarmad Y. Hermiz	Read Replies (3) \| Respond to of 164684

>> Give me a headline saying the electricity fiasco in California is resolved next week and i'll give you a rally :) << Here it is, from the wall street Journal. ARLINGTON, Va. -- Power-plant operator AES Corp. submitted a proposal to the California Energy Commission to restart two gas-fired units that were retired in 1995. The units would add 450 megawatts of generation in the electricity-strapped state as early as June 1, if regulatory approvals can be secured