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.

Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: Warpfactor who wrote (10169)	11/2/2001 1:21:03 PM
From: cnyndwllr	Read Replies (3) \| Respond to of 23153

Warp and thread. What's the good news on the economic front? I am looking but I don't see much. Energy prices are low. That's good news but the bad news is that energy prices are low only because the economies of the world have slowed. There is less energy coming on line and therefor as the economy picks up energy should be coming back up and we should be approaching the "crisis" stage we were at when the economy was healthier. If there are Mid East supply disruptions because of sabotage, war or politics, energy will be high regardless of the health of the overall economy. The energy tax on the economy is not eliminated, therefor, at best it is suspended and may be back even without an economic recovery. More good news is that the fed has reduced rates and the fed is spending money regardless of whether it is deficit spending or not. The monetary and fiscal stimulus should be, and undoubtedly is, pulling upward, however it is pulling a heavy load right now. The load may not be slipping down the hill too fast but, on the other hand, it isn't generating momentum up the hill. The other "good" news is that we think we know all the bad news, have it built into our models, and believe we can look past the effects of the bad news and see sunshine on the other side where, as JimP says, those three year old computers we bought in 99 get replaced and the bottom that Gottfried sees in chips and chip equip has turned up and started the climb into the next up cycle. As much as I like to look ahead and see a sunny day, I see some dark clouds ahead. They may not result in thunderstorms and flash floods but I'm not counting on it. between now and the time when buying patterns change and companies are making good sales here and overseas, employment is picking up and the major world economies are on the upswing, there are likely to be a lot of alarms. Some of the alarms will be false, I'm afraid that some of them will be real. The ones that worry me the most are the threat of escalating conflict between western and eastern nations and the threat of consumers turning away from spending and toward preservation of capital. An escalation of the west/east conflict could take any number of forms which would effect the economy adversely. The gamut runs from outright war with, or between, two or more mid eastern nations, the internal overthrow of Mid east regimes which are economically friendly to the west, or simply an escalation of the number and the determination of terrorists and their acts. I don't think all of the adverse effects those things would have on the economy here and in Europe are built into the stock market. The other big factor is, of course, consumer and corporate spending. This is an elusive factor that requires complex economic models to project. The problem is that we don't have such models since the events of the last year are unique. No one can project the breaking point where the public's confidence turns to a feeling that things are not going to get better soon and will likely get a lot worse. The fed is trying very hard to move the pivot point on the balance board by making money freely available and by appearing to be strong and in control. If the weight on the "bad" end of the board shifts suddenly, however, the end result could well be a sharp change in the balance which tilts so sharply that it creates it's own momentum on the way to the ground. The result, if a shock occurs which limits spending and increases saving AND which is viewed as something more than short term, could be a Japan like recession that would result in substantial changes in capital allocations, employment patterns and would effect stocks dramatically. Will this happen? I doubt it but the fact that it was not on the horizon of most investors a few months ago and is on the radar of many now, will act as a damper and an accelerater to the downside if the bad "ifs" start to come into focus. In my opinion it's a better bet that we will have one or more chances to buy in lower than today's equity values than it is that the market will head up from here and not look back. Having said that, I am about 90% invested in tech and biotech, with rdc as my only appreciable energy holding. At some point I intend to get margined and start playing the higher risk game I played successfully in the past. If anyone has the view that this is a great place to get in and trade things on the way UP, I would be interested in listening to your analysis. Ed PS I just read the thread. Kodiak, do your fair share for America and buy more sdram or, better yet, a new computer. If you are really patriotic, you will buy a BMW Z3. Now THAT'S a machine. G.