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

To: Cynic 2005 who wrote (9438)	11/25/1997 11:38:00 PM
From: Cynic 2005	Read Replies (5) \| Respond to of 18056

To all, I wish investing/trading is as simple as counting the number of bulls and bears on SI homepage and taking a counter position on OEX. We have been fortunate to hear from several big and independent thinkers on this thread. A lot was talked about Japan, Asia and LA, bonds vs. stocks, interest rates etc etc. But one crucial market dynamic that missed our focus is the "churn" caused by steep swings in the market. Let us face it. This market is being traded as high as it as been because of one thing. Liquidity. Now there is a serious threat to liquidity. The 300-400 point swings since early August must have consumed a lot of cash. How much of it is remaining to be "invested" in the market remains to be seen. My guess is that it would be a lot less than what it was in August or September. You can't ignore this fact while dreaming about new-highs for the markets soon. The world events imparted much needed fear among several investors. You can see it in the market breadth, may be not in the indexes. Also, the world events have changed certain things for good. At least for a few short months. What the US saw in early 30's, Thailand is seeing now. Indonesia may be very close to that situation. A whole lot of perceived wealth has been wiped-out in certain parts of the world. Now, the top priority of these people is not a souped-up PC with internet connection. It is basic necessities of life - food, shelter and clothing. Much less, keeping an American stock market afloat at their expense. -Mohan