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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: Sergio H who wrote (29045)	9/18/2002 2:23:36 PM
From: LAWRENCE C.	Read Replies (2) \| Respond to of 29382

Godot, the question is where are the US and world economies going? Currently looks like a stable US economy with little growth. There is a credit bubble, housing prices which are rising faster than incomes making them less affordable, a potential war with Iraq, a potential attack by Saddam Hussien if he obtains a means of delivery of nuclear or chemical weapons, an increasing trade deficit, plus mutual fund redemptions and what foreign investors will do, plus companies using projected potential pension fund gains of 10% and over (those gains seem highly questionable with the current an almost flat US economy). Some investment advisors are saying that most investor are not aware of the scope of underfunding of pension funds and the boast that projected pension fund gains adds to the bottom line. If any companies have to start paying into pension funds out of profits because of past over optimistic pension gain assumptions, it could have a big negative affect on companies with legacy defined pension plans. History would suggest that at some point terrorists will strike at more US targets. They didn't topple the WTC on the first try but they tried again. The fact that a passenger was able to get a handgun past airport security in Atlanta doesn't give me a warm fuzzy feeling about our airport security. In our open society we have a lot of potential targets in the US. There are even more vulnerable targets abroad including the straits out of the Persian Gulf. On the plus side consumer spending, housing, autos, insurance and health care have held up so far. However overall profit margins on autos have been lower. Overall to me there is still a lot of downside risk ahead for most companies. I expect slow growing profits for most companies but over time any of the above could put more holes in the US economic recovery. Overall the airline industry is in bad shape which could mean more layoffs in that industry with a high probability of more airline bankruptcies. Few industries have pricing power: insurance and medical care. Lowest cost producers have the advantage. There is a danger of dipping back into recession or worse a depression. The US economy is like the Titantic. It is gigantic but it could hit an economic iceberg and not have enough life boats. The US has its vulnerabilities like the Titantic. The US government should be holding onto its gold. LC