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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: Keith Monahan who wrote (946)	1/31/2001 11:19:56 PM
From: ahhaha	Read Replies (1) \| Respond to of 24758

Are you not making a case for continued strong investment in U.S. companies, despite the monetary and fiscal problems? Are we not the only game in town, at least in the new economy stocks? At last, some intelligence does exist on this planet. The explanation is complex. During an extended world wide stock market correction which may be termed a "bear market", investment anywhere dries up. Risk is perceived to be too high, but that doesn't mean that intense investment doesn't continue in areas like optics. The investors hold ever more of their money in short term investments as they get burned by taking risk. One form of this holding is in DOW and big board stocks. That's why the NAZ and NYSE tend to move somewhat in inverse. The large institutions are using the big stocks as a place to park money. The problem with doing this is that there is no conviction to hold. These funds are literally buying dogs to appease the demands of the public. Large international capital flows will generally follow what the big institutions in the US do. In the past the Treasury market was a prime target for such factoring too. This is changing rapidly because the Treasury market is being sunk. The result is that the big flows either have to go into the large caps with attendant mediocre growth aspects, or they have to go in currencies. Holding currency even the dollar is risky and it has no yield which is very important to size. So certainly a very significant portion of foreign flows will go to direct investment in the US. This definitely puts the lie to Kellner's claim, but it doesn't mean that investment will go indirectly into paper assets like stocks representing the outcome of direct investment. The problem with direct investment in the US is that the US isn't production efficient. Japan has learned a hard lesson on this front. Don't be impressed by the productivity computations AG makes which is loaded with "creation". That is, economists can't separate definiens and definiendum when it come to defining productivity. So where can money go? The only thing left is into itself. Into gold!