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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (1728)	7/10/2002 1:50:30 PM
From: t2	Read Replies (2) \| Respond to of 89467

Anyone recall the comments made by Art Cashin a couple of weeks ago regarding how SnP500 index funds work. I recall that he said something like this: index funds use something similar to a line of credit to meet redemptions because the objective of such funds is not to generate capital gains. So they avoid selling if at all possible. Cashin said that if the new money does not come in, then such funds will not only have to sell enough to cover the credit line but also sell more for the new redemptions. That would basically mean, recent redemptions of index funds may not be fully reflected in the market yet. He seemed to think such situations can be DANGEROUS. I wonder if we are in a period such as that given non-Americans will be the largest investors in the index type of funds...and to me it seems they are the ones in the most hurry to bail out (my hunch--given how dollar is now weakening) jmho