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Strategies & Market Trends : Market Gems-Trading Strong Earnings Growth and Momentum -- Ignore unavailable to you. Want to Upgrade?

To: ChrisJP who wrote (5507)	2/28/2001 1:23:32 PM
From: Lane Hall-Witt	Respond to of 6445

I've also been saying for some time, what will the average investor do when they finally realize they could have gotten a better return from a money market fund than they could have from almost any index fund over the past 2 years? ChrisJP-- Yes, this is a real worry and could become a huge drag if people start to act on this information. There are two other potential "money-flow" problems that could spell big trouble. One is overseas money: the U.S. markets, the bond markets especially, have been propped up for years by large inflows of money from all around the world. This has not only helped the markets directly, but has helped foot the bill for the U.S. trade deficit. When are these foreign investors going to lose patience with the U.S. markets and begin repatriating significant amounts of money? Foreigners own something like 40 percent of the U.S. Treasuries, so it would be no small event if overseas investors started to pull back from our financial markets. Second is the amount of stock held on debt: the threat of margin calls (among retail investors) and credit calls (among institutions) remains a significant risk, even after the beating of the past 12 months, as there is still a massive amount of leverage underpinning the equity and commodity markets.