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.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: reaper who wrote (179384)	7/12/2002 10:56:56 AM
From: nextrade!	Respond to of 436258

Absolutey reaper, fyi, an excerpt from contraryinvestor.com Although the correlation between money growth and equity market performance was not exactly tight during the 1980's, there is no question that the R-squared value in this relationship went up exponentially during the 1990's...until 2000 came along, that is. Approximately one half of all M3 in existence today was created since 1995. There is absolutely no doubt in our minds that growing money (and credit which begat much of this money growth in the first place) was an essential piece of the new era stock acceleration puzzle during the latter half of the last decade. The question we now pose is that, "has the turn in the credit cycle largely negated the positive influence of money growth on financial asset prices and the broader economy?" Despite over $1.6 trillion of additional M3 coming into our lives since 2000, is the corporate sector's feverish work to send bond and equity investor funds to "money heaven" (corporate bankruptcies) outweighing what would have ordinarily been the extremely positive impact of this type of M3 growth? As you know, the folks at Worldcom today speculated that an official filing may be the only avenue left to them. Message? Expect the filing any day. Credit cycle reconciliation is deepening. With Enron, Worldcom, Kmart, Adelphia, Global Crossing, etc. going down in relatively short order, just where are the credit derivative losses associated with these accidents? Just how much more M3 will be needed just to "keep us even"? Are Greenspan and the Fed racing to stay ahead of debt deflation? It sure appears as such. As the downside of this once in a generation credit cycle continues to play out, the American household now caught in the financial crossfire has a target painted on directly its collective head. Regards