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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: GROUND ZERO™ who wrote (59703)	9/5/2002 12:06:34 AM
From: Gersh Avery	Read Replies (1) \| Respond to of 94695

couple of number ideas .. Before I start, let me point out one item. There are no stock price traffic cops out there. PE is only a suggestion, not a regulation. The only thing that sets the price of a stock is: SUPPLY AND DEMAND everything else is only smoke and mirrors. now .. some number stuff. I seem to remember the idea of 2.5 children per family .. OK .. I'll use that number. So then for each member of the workforce there is 1.25 persons able to replace them. Nope .. not quite that simple. Say a worklife of 40 years and a child life of 20 then the ratio would be more like 2.5 persons about to work for every one about to retire. OK .. cool. now say that all of these people put 10% of their income into the market their entire worklife. If I assume at this point that there is no inflation and the market stays flat then: the retired person would be only be able to take out 10% * 2.5 or only 25% of the lifestyle they were used to. This presumes that there is no overhead within the system. However .. we know that the mutual fund system consumes $400 million per week. (keep that one in mind .. if inflows are less than $400 million during any week, then overhead has eaten all the gain) Then there is the wall street overhead .. this presents itself in the form of commissions and bid ask spread. In other words all the slippage that takes place for all the transactions that take place. Over all, the stock market system in the US requires an inflow of cash just to stay at break even. So then the 25% figure drops to sayyyyyy .. 15%. Nobody puts away 10% of their income their entire worklife expecting to live on only 15% of the income that they were used to. They will take more. If they are taking more, then there will be more sellers than buyers. With the market going down, the current workforce will be tempted not to invest making the situation worse. So there's some numbers .. Over simplified to present the idea. You now begin to see my dark pictures.