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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (561)	4/30/2003 12:35:05 PM
From: LLCF	Respond to of 4912

<It must have been truly devastating for them to earn double digit returns in the stock market all those years....and double digit returns in the bond market for the last twenty or so ...as well as the currency kicker> This shows exactly WHY the accumulation of dollars had been institutionalized and not necessarily a well thought out day to day rational decision. Sort of like simply having the retirement account directly into the agressive growth fund year after year. <foreign investors did not really crowd into dollar assets until they became severely overpriced. > I remember talk about British funds being underweight US for years and years when I was in Frankfurt... I also know the Germans started punting away big time in the American tech warrant game. As for the rest of 'foreigners' I don't know... other than the legendary accumen of the Japanese real estate investors. :) DAK

To: Wyätt Gwyön who wrote (561)	4/30/2003 12:48:49 PM
From: GraceZ	Read Replies (1) \| Respond to of 4912

were hesitant when US assets were cheap, but bought in big at the top. Well now there you go, you not only dispelled that guy's thesis that the capital flows from foreign trade partners (which they had no choice but to put into dollar denominated assets or see their currencies rise) were what caused the asset bubble and dollar rise here in this country but you also touch on the real reason that the dollar has fallen off it's peak (meanwhile the trade deficit rose and has only recently moderated). If I read you correctly you are you saying those dollars from the trade deficit didn't come back here to be put in our securities markets in any great way prior to 1999 or so? We've had a huge trade deficit for eons. Throughout the 70s the Japanese were being shipped boatloads of dollars. What did they do with them? now they are piling into one of the worst asset classes on the planet at a huge cycle peak. it'd be hard to come up with a worse allocation scenario if one tried. Certainly this has more to do with dollar weakness then anything else, the growing realization that dollar denominated bonds can not possibly continue to give the great returns they gave while interest rates were falling and there might be a place that provides a better return. Some place with maybe a higher interest rate (name those currencies). While the little guys foreign and domestic run up bonds, the pros will take their money out. This happened in spades from 1999-2000 in the equity markets, as prices rose the money flow was decidedly negative.