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

To: paul_philp who wrote (20902)	7/8/2002 12:50:06 AM
From: AC Flyer	Read Replies (1) \| Respond to of 74559

Paul: >>BTW, in terms of % of GNP, the 1845 railway bubble was slightly larger than our bubble. They are both about twice the size of the next tier though. Also, we have to differentiate asset-manias from technology-bubbles. One has no economic net positive and the second has massive economic net positives<< Interesting observation. We have recently experienced a technology bubble, imo, which has left us with a tremendously enhanced and now largely written down telecommunications infrastructure. The economic signals are increasingly positive and yet we still have a vast number of folks making the same old mistake of projecting current trends in a linear, not cyclical, fashion. (In booms, trees grow to the sky, in busts, the pit is bottomless). As always, the little guy will now stay in cash and bonds far too long. The sophisticated little guy in gold and puts.

To: paul_philp who wrote (20902)	7/8/2002 12:53:30 AM
From: Snowshoe	Read Replies (2) \| Respond to of 74559

BTW, in terms of % of GNP, the 1845 railway bubble was slightly larger than our bubble. By coincidence I was just reading about the telecom bubble vs. the railroad bubble in the American west... Telecom Sector May Find Past Is Its Future Giant Phone Companies Offer Stable, Well-Funded Option washingtonpost.com While the telecommunications wave of the late 1990s stands as a particularly severe case of overinvestment and bust, it is hardly the first. In the middle of the 19th century, railroad tracks looked something like the fiber optics cables of today. "The railroads opened up the Midwest and made it possible to get grain to the Eastern ports so it could be exported economically," said Richard S. Tedlow, a historian at the Harvard School of Business. Europe was in crisis and capital surged into America's burgeoning rail system. By the latter years of the century, there were too many tracks -- seven networks connecting Kansas City, Mo., and Chicago alone. By June 1894, 192 different companies were in bankruptcy. Together they controlled 40,000 miles of track, about a quarter of the nation's total stock. Some see in the railroads a consoling parallel. "The railroads all went broke, but the laying of those tracks was the basis for prosperity in the second-half of the 19th century," said Blair Levin, an analyst at Legg Mason and a former FCC chief of staff. "Today, the U.S. is benefiting from really cheap communications prices." Savvy entrepreneurs such as J.P. Morgan crafted profitable businesses out of choice railroad assets they bought out of bankruptcy. Some investors are now looking for bargains among the telecommunications wreckage. Bill Gross, who controls $260 billion of investment at Pacific Investment Management Co., has been buying the bonds of battered companies such as AT&T and Sprint. IDT Corp., a discount long-distance telephone company, bought some of WinStar's assets and hopes to buy the MCI residential long distance business from WorldCom.