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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Cynic 2005 who wrote (8739)	11/20/1997 5:26:00 PM
From: Jumper	Read Replies (2) \| Respond to of 18056

Asia broken down: "So bears can understand" exchange2000.com Hi Mohan- Where did all those new bears go anyway?

To: Cynic 2005 who wrote (8739)	11/20/1997 5:43:00 PM
From: Rational	Read Replies (1) \| Respond to of 18056

Mohan: I think that the market will continue to remain volatile, and that with volatility, prices will inch up/down slowly, not as fast as it went up so far over the last few years. In general, stock prices are stochastic and so one cannot predict their exact movements, despite convictions oneway or the other. The market corrected from 8200 to 7400 and is now inching up amid volatility, because of the changed mood that SE Asia may not impact the US as much as previously believed. A change in this sentiment (based on actual data on revenues and earnings from SE Asia), expectations on interest rate and corporate earnings growth/decline will alter the drift of the stochastic price process, IMO. Most of the US exports are capacity generating equipment (that like AMAT ships), and there is a lot of over-capacity around the globe. The apetite for the capacity is fueled by the selling in the US and Europe of products generated from that capacity build up. In particular, however, as stocks go up, people get more cash to spend on other things, which signals to produce more by building up capacity, raising the stock price further. Thus, stock prices can be stochastic, but there may be an unexpected downward correction if stock price advances have given rise to a substantial increase in consumption (especially in US and Europe) and if the latest correction is insufficient to account for this. It is just my opinion. Sankar PS: Thanks for your e-mail. I was busy teaching.

To: Cynic 2005 who wrote (8739)	11/20/1997 6:12:00 PM
From: Bearded One	Read Replies (1) \| Respond to of 18056

Fundamentally, the problem Asia has is that they're realizing that they're not as rich as they thought they were. The fundamental bear view is that the same is true here in America. So, when will the American people realize that they're not as rich as they think they are? It used to be that the stock market was a leading indicator. But that assumes some intelligence on the part of the money in the stock market. Since more people are now in the stock market, one has to assume that the intelligence of the market has decreased. That's simply regression towards the mean, and no insult on anyone. I claim that the stock market is now a trailing indicator of the economy. Or, at least, the lead time has gone way down. That means the bad news has to hit us directly before the market goes down, rather than vice versa. Given that theory, for Americans to realize that they're not as well off as they think, we have to look at the classic problems that directly affect people: 1) Inflation 2) Unemployment (deflation) 3) Interest rates. So when will these things hit us? There seems to be an implicit argument going around that inflation and deflation cancel each other out. Of course, anyone who remembers the Ford-Carter stagflation years knows that's bunk. But when will these things hit? That's the question. Because I think that the public will just keep buying and buying and buying until they've run out of money due to one of these three items.