Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : WDC/Sandisk Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Art Bechhoefer who wrote (19075)	2/12/2001 11:06:00 AM
From: straight life	Respond to of 60323

"The catastrophe of October, 1987 was precipitated by the Federal Reserve raising interest rates at a point where the dollar was already overvalued in relation to the yen and other currencies. The result was immediate and breathtaking..." Don't forget Treasury Sec'y James Baker's comments at the time that were seen as refusing to support the dollar sl@seeinghisfaceinFLArecentlybroughtbacksomeBADmemories.pov

To: Art Bechhoefer who wrote (19075)	2/12/2001 11:22:19 AM
From: hueyone	Respond to of 60323

re: Huey, the question is not whether a government agency or central bank can affect the business cycle. Art, are you capable of understanding plain English? I think not, because I certainly did not say the central government cannot affect the business cycle. As to the data supporting this(Republican conspiracy) theory, as I noted in a previous response, all you have to do is look at the changes in institutional holdings of major stocks, such as Intel, AMD, Dell, Lucent, Corning, Cisco, etc. The changes show better than any other documentation that the severe drop in the price of these stocks was not tied to a similar drop in earnings. The fact institutions have sold off overvalued tech stocks is "evidence" of a Republican conspiracy? Where did you learn to reason? You call this "evidence"? Have you looked at the forward earnings projections for Cisco and Sandisk? Did you listen to the CCs? This couldn't have anything to do with their new valuations could it? Art, on one hand you are blaming the Fed for over tightening and on the other hand you are conjuring up a "Republican conspiracy". I tend to agree that the Fed over tightened. The Fed cannot always get it right. The overtightening in late 1999 and early 2000 is now taking its toll on the near term outlook for our companies. It didn't take jawboning by the President one way or the other for investors to conclude that many tech stocks were (are?) overvalued in relation to forward earnings expectations. Many of these companies are now facing negative, near term, sequential eanings growth. For a fellow who claims "45 years of investing experience", I am surprised you cannot readily see this. Best, Huey

To: Art Bechhoefer who wrote (19075)	2/12/2001 12:53:12 PM
From: Robert Douglas	Read Replies (1) \| Respond to of 60323

The catastrophe of October, 1987 was precipitated by the Federal Reserve raising interest rates at a point where the dollar was already overvalued in relation to the yen and other currencies. The result was immediate and breathtaking. Investors immediately switched out of stocks into bonds, and the stock markets, which were not yet limited by trading curbs and circuit breakers, plummeted. This is a clear instance of a government agency (the central bank) making a humongous mistake. Your timeline is off. The Fed began raising rates in 1986 for very real reasons. The economy was brisk and inflation was picking up. The dollar had already corrected most of its overvaluation, down about 35% from its peak in early 1985. It continued down more than 10% during the next year as the Fed continued its modest tightening. This tightening began a year before the "crash of 87." During the first 10 months of 87 the bond market was in a horrible bear market and the switch from stocks to bonds occurred at a low that bonds have not seen since. History has clearly born out that the Fed's tightening of that period was warranted. Indeed, after the stock decline of 1987 made little change in the rate of growth and the rise of inflation, the Fed resumed their tightening until the Fed funds rate hit about 10% and precipitated the recession of 90,91. The Fed action during this period was right on the money and is hardly an example of irresponsibility like you suggest.