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Strategies & Market Trends : Z Best Place to Talk Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Larry S. who wrote (43069)	8/18/2002 7:39:05 AM
From: Joe Stocks	Read Replies (2) \| Respond to of 53068

>>Davis updated his classic 1991 tome, "Being Right or Making Money," << Reminds me of something I am very quilty of. Often I am long term right about a stock or market move but early causing me a loss. I think this is where Nemer's thoughts come into play. Wait for the technicals to come into play with your fundamental analysis if you are using fundamentals. Of course Nemer could not care less about the fundies and makes some very good points about just using the technicals. Myself, I seem to need more of the fundamental picture. I need to work on that and concentrate more on those technicals. Below are Ned Davis's comments about Greenspan. I thought the "manipulation" comment was interesting. Q: You've refrained from assigning blame for all this. Are you critical at all of Fed Chairman Greenspan? A: I criticize him on two factors, and the second one is more a personal thing. The main fault I have with him is the discussion about a bubble in September of 1996 at the Fed when Larry Lindsey recognized there was a bubble and advised the best time to stop it was before the froth got really big. Greenspan essentially said if there were a bubble, it could be stopped by raising margin requirements. Yet he never raised margin requirements. He responded in December of that year by talking about "irrational exuberance." He needed to raise margin requirements. I'm absolutely convinced the bubble is a lot bigger than it might have been had they raised margin requirements. My other criticism is how he cut interest rates in surprise moves. It is one thing if you have an intra-monthly meeting and you decide to do something and you think the time is right. But three times he cut interest rates with about an hour left in the market. Twice he did it in an option-expiration week, near the end of the week, when all the traders are short a bunch of puts and calls. It looked like a move of genius in that it sparked huge rallies and restored confidence. But to me, it looked like manipulation of the stock market, and it backfired because it scared the heck out of the bond market. The bond market reacted as if the Fed was trying to put this bubble back together again. Since then, every time the market gets going and begins to act well, the bond market goes down. The link was broken when bond market participants felt as if the authorities would do anything to stimulate the market. To get a long-term bull market, we need a healthy bond market and we need bonds to behave, and that means yields have to keep coming down. We need to get long-term rates down. Otherwise, Greenspan has done a very good job.