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Strategies & Market Trends : The New Bull Market. -- Ignore unavailable to you. Want to Upgrade?

To: Rich1 who wrote (1635)	2/4/2004 3:28:50 PM
From: Ms. Baby Boomer	Respond to of 1750

Weak Dollar Not A Stock Killer, Despite Fears Of Another 1987 Wednesday February 4, 10:28 am ET By David Saito-Chung Investor's Business Daily Excerpt... Bull Market Still Young "We aren't well into an economic recovery the way were back then. You look at 1987, and we were five years into a recovery," said Lincoln Anderson, chief investment officer at Boston-based LPL Financial Services, the largest independent broker/dealer in the U.S. "The economy was slowing down, inflation was finally coming up and the bond market blew up." Anderson, a senior staff economist at the Council of Economic Advisers under President Reagan from 1982 to 1986, stresses the dollar's recent swing has been milder than the one two decades ago. From March 1985 to the end of September 1987, the Atlanta Fed's dollar trade-weighted index fell 23% after rallying nearly 40% from early 1980. More recently, the index rose 28% from April 1995 to January 2002 before dipping 18%. "It's been a much more muted swing," Anderson said. And Anderson believes Fed interest rate hikes were more to blame for the 1987 market crash than the weak dollar. In late 1986, new Fed chief Alan Greenspan began raising rates to fight rising inflation. Over seven hikes, the fed funds rate rose from 5.875% to 7.25%. The yield on the 30-year Treasury spiked from just above 7% to 10.13% in the week before stocks collapsed. "In retrospect, it is easy to reconstruct the sequence of events that led to the crash," George Soros wrote in his book "The Alchemy of Finance." "The boom had been fed by liquidity; it was a reduction in liquidity that established the preconditions for a crash.".... biz.yahoo.com