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Strategies & Market Trends : Steve's Channelling Thread -- Ignore unavailable to you. Want to Upgrade?

To: Zakrosian who wrote (23400)	8/8/2001 8:52:47 PM
From: Pink Minion	Respond to of 30051

At the end of July, the PE for the entire S&P 500 group of stocks stood at almost 27 Just think what the PE would be if you removed all the scam accounting tricks that are used today.

To: Zakrosian who wrote (23400)	8/9/2001 10:05:14 AM
From: Lane Hall-Witt	Respond to of 30051

If Biggs is right, the economy could lose one of its last shields against recession -- consumer buying. Though increasing less than in 2000, it has cushioned the fall in business investment spending. Consumer spending has in turn been buoyed by huge realized capital gains, after-tax profits on stocks actually sold. In 1995 they totaled $140 billion, equal to 2.6 percent of disposable personal income, say economists at Goldman Sachs. By 2000 they'd exploded to $534 billion, equal to 7.6 percent of disposable income. A lower stock market would ultimately squeeze this source of cash and, almost certainly, weaken spending. I've been looking for data on asset sales for some time, because I have suspected that they have been giving consumer spending a big boost, even in the face of a weakening economy. The market analysts tend to think that the declining stock prices of the past 18 months would make people feel poorer because they're seeing their wealth decline. But think in terms of a "cash effect" rather than a "wealth effect" -- and one can imagine that people in some sense feel much better off because their cash holdings have skyrocketed. How many people have bought a house or a car with money from asset sales in the past 18 months? You know, precisely those big-ticket items that economists keep calling the miracle of the economic downturn! Unfortunately, the economic stimulus from the $32 billion tax rebate doesn't look so large when one considers the magnitude of the impact that asset sales have probably had on consumption these past couple of years. Cash raised from asset sales will probably decline significantly -- on the order of hundreds of billions of dollars -- in 2001 and 2002. That's quite a shortfall and makes me very nervous about the consumer in 2002 and 2003.