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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (14496)	2/5/2002 4:18:14 AM
From: Maurice Winn	Respond to of 74559

<Now you have got the script> Hi Jay. There's a bit of catching up for your neurotransmitters with lots of rants. Actually, I had the script about 4 years ago and had consolidated instead [with some doubt] around the ideas I've expounded here for the past year now. I'm very, very happy that my worst fear, a sudden implosion as the derivatives and margins markets collapsed in a vast domino process, didn't happen and almost certainly won't happen now that there are no irrationally exuberant people leaping around [apart from me, but I'm totally rationally exuberant]. With that fear taken care of, we are dealing with what I thought would happen, which is a grinding down of all the margined and overly optimistic dot.coms companies and their shareholders. There's also an associated Dow and S&P tidying up to be completed [they were carried along in the fun and while their earnings are reasonable, they get taken down in the clearing-out process]. Also, as expected, Uncle Al has been manning the pumps and pumping the dollar for all he's worth. He's slashed interest rates so that cash holders must be whimpering over their horribly reduced monthly interest payments and wondering what the heck to do with their now static money with the serious risk of devaluation compared with other investments and inflation against other assets. Uncle Al is giving everyone the message that they had better NOT hold onto US$ but had better do with it the only thing possible, which is to buy something else. Whether that's consumer goods, corporate assets such as new and improved production facilities, staff or other businesses, shares or gold he probably doesn't care too much. I suppose if a lot of people start buying gold, the large reserve holders will take the opportunity to feed a lot more tons of the stuff into a transiently high-priced market [which, my guess, would be around $300 an ounce]. I think fighting the Fed and hoping for Dow 5000 is a risky way of life. Interest rates are pitiful now [actually, they are quite reasonable given life expectancy in the cash-holding crowd, but pitiful compared with the high nominal rates gained during the inflationary 1970s and 1980s and a good part of the 1990s when irrational exuberance helped hold them up]. Earning interest is not very entertaining [very slow growth]. Buying shares instead isn't much fun either [very small profits]. I think buying goods and services will be the most popular response. Those hoping to live on the interest will be having a hard time. Tax revenue will be down a LOT [no capital gains taxes and tiny tax on interest]. People can't take it with them and they won't want to just sit on it for ages, so they'll go shopping [there are a lot of bargains for sale right now and interest payments are low too, so debt will increase for those with repayment ability]. People worry about overall levels of credit, but if the promise to repay is good, which it is in a country such as the USA which is robust at enforcing contracts, debts and payments, then there's nothing wrong with consuming in advance of earning, at the time of earning or after earning. Timing of expenditure needn't be concurrent with earning. That's one of the beauties of the USA system. I grew up with the sequence of events being learn, work, save, invest, spend. Americans [and increasingly Kiwis] spend, learn, spend, work, save, invest, spend. They often leave out the two stages of save and invest, which means continuous working and no loafing around ranting on the internet. Happy holidays in case you have to give up on SI to clear the decks for 3 weeks. Mqurice Dow 16,000 Feb 2002 [Which will have to be the long run straightened curve when we look backwards - since we won't get there in 3 weeks]. Dow, Nikkei and Hang Seng nearly all below 10,000 in preparation for triple-witching 20.02 20.02.2002

To: TobagoJack who wrote (14496)	2/5/2002 10:52:12 AM
From: LLCF	Respond to of 74559

LOL Jay... interestingly enough there have already been 100's% made in Gold equities in the past year for the prudent. DAK

To: TobagoJack who wrote (14496)	2/7/2002 2:55:39 AM
From: Maurice Winn	Read Replies (2) \| Respond to of 74559

Well Jay, [if you are still there and not off on your holiday just yet], I'm now the proud owner of a Tonka Truck full of Global Crossing debt. It was expensive at 4.25c per unit, but I guess that's the price I have to pay for a premium asset such as fibre wrapping the world, delivering cyberspace in bulk from continent to continent. None of that Aztec stuff yet, but I see it's nearing $300 an ounce which I dare say will stimulate a load of gold being sold off by central banks. I wonder if it'll make it to $400? I doubt it. It's already in that bubble zone where profits are purely based on the greater fool theory. Despite a lot of printing, competitive devaluation etc, the inflationary effects haven't raised the production cost to $300. So, it's a borrowed-time situation. Which I suppose is the normal human condition, so that's nothing new. I hope you have an enjoyable holiday and return refreshed for some booming, busting and recovering. [Now that the great financial collapse of 2001 didn't happen]. See how our interests are aligning. Now both wanting Global Crossing to succeed, or at least the assets to be successfully sold. It's the magic of the markets. Mqurice