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Strategies & Market Trends : Classic TA Workplace -- Ignore unavailable to you. Want to Upgrade?

To: The Freep who wrote (2392)	5/11/2001 10:23:40 AM
From: Perspective	Respond to of 209892

Yeah, I heard a vicious rumour that Luc was going to cash in his gold winnings and leave the rat-race, so I was practicing to take over his role. <g> AA's right - I didn't mean to make a "call" - it was in the sense that markets tend to go down once everybody who wants in is in. Then a buying vacuum develops while everybody stares at each other wondering why the hell everybody else isn't buying on all the good news. And ever since the abnormal mutual fund influx of 1998-2000 has abated, the number of people wanting in has been limited to small bursts. You've had the people who bought every 10% dip in a stock; they got it. You've got the people who were waiting for a little pullback in April 2000; they got it. You've got those who wanted to see the Naz drop by 1/3 or so, and those who were waiting for the first Fed rate cut to buy. You've got those who waited for a 2/3 loss in Naz, and those waiting for three and four rate cuts. You've even got those who were waiting to buy on a flood of bad news, or the news that semiconductor orders had virtually vanished. I supposed you still have people who might buy on news of the end of semiconductor cancellations, which is coming. However, end-market usage rates, which is what my CEO considers, don't show any sign of improvement, hence our recent revenue miss. I think the majority of the remaining sideline cash which is so heavily touted is actually waiting for something representing a historically favorable risk:reward setup from a valuation standpoint, or at least to see valuations reflect in some small way the bad news that pervades. And that won't happen in a big way until the decreasing employment levels finally start tagging 401K flows and things like retail sales, or until the Clownbuck and long-term bonds finally cave. The economy could come marching back from the brink of recession on optimism over rate cuts, but I see two things on the macro level: 1. We haven't had a recession in over a decade; we're due, and the Fed can't really do anything to prevent it. 2. Even if people don't retrench for recession, the mere act of people and corporations living within their means for the next year would be enough to produce a serious recession. The private sector spent $700B of borrowed money last year, 7% of GDP. We don't need to suddenly become a nation of savers to have a recession; just decreasing the ridiculous rates of leveraging up would do it. BC