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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: westpacific who wrote (76166)	12/20/2006 7:16:11 AM
From: Mike Johnston	Respond to of 110194

If everybody was a millionaire, then a cup of coffee at Starbucks would be 50 bucks. It is very difficult to invest and trade right now, because everything has gotten so unpredictable and so out of whack. Bonds, stocks give conflicting signals. The classic economic theory cannot be applied here, because this is not a normal economy. A normal economy is a free market economy with sound currency. Here we have neither. One must be very careful these days not to stick to one position and not being open to all possibilities. It is possible that in the upcoming debacle both bulls and bears will be wiped out. While i believe we are in the very early stages of hyperinflation with culmination phase perhaps 5-10 years away, i am not blind and i can change my position if i see some developments that would support a different outcome. I am really glad that Zimbabwe is providing a real life example how things can spin out of control. Although it is not going to get that bad here, at least we can treat this as an exercise in removing limits from our imagination.

To: westpacific who wrote (76166)	12/20/2006 7:24:36 AM
From: Mike Johnston	Read Replies (1) \| Respond to of 110194

Consider these quotes: 1. "In a normal economy, stock market performance should mirror the economic prospects of the country, but in our case it is a lot different … I think the good rally is because there are very few investment options that can provide real returns," says Patrick Saziwa, an analyst at Kingdom Stockbrokers. 2. "People know where the good returns are. The stock market is one of the few [to offer these] and this is why we see it performing above all markets," says Emmanuel Munyukwi, the chief executive of the ZSE. 3. Some companies have been accused of taking advantage of special low interest rates meant for troubled industries to borrow money cheaply and buy shares, instead of using the funds to improve industrial production. 4. The central bank's recent efforts to mop up excess liquidity ......... Hmm, ... low interest rates, liquidity, speculation instead of production, very few investment options... Sounds eerily familiar, doesn't it ? -