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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: William H Huebl who wrote (11491)	12/13/1997 2:57:00 PM
From: Rajiv	Read Replies (3) \| Respond to of 94695

Opinions of a lurker... The tech slaughter is yet to be completed. I am expecting a decline in the Nasdaq of > 20% over the next 6 months. We are yet to see the effects of the devaluations of the asian currencies. The asian companies which do not file for bankruptcy will have an advantage of a very favorable local currency to dollar ratio. Their exports will be VERY competitive. The companies which will do well are the ones with low debt (in foreign currencies). The debt in foreign currencies will be very difficult to service (especially as this debt would have doubled when converted to the local currencies). The higher interest rates on the debt in local currency deniminated loans will be more than compensated in the competitiveness of the exports. Most companies in Asia are export oriented. The ones which are not will suffer (e.g. the property markets). The American companies having plants in Asia, have built them using $ debt and continue to value their capital equipment in $. This value will be sharply lower if they adjust it to the local currency and reflect it in their accounts. Over the next few months we will see the effects of the Asian powerhouses being very competitive in Asia. The effect will be felt in China (as her rivals become more competitive in the forign markets) probably forcing it to devalue their currency. This might also cause the artifical peg of the HK dollar to the greenback to go. The effects will be visible in the quarters to come. We will see estimates being lowered and companies failing to meet the estimates. And once that happens, the effect on the stock price will be magnified by the fact that the PE ratios will go down. This is not a time to make "investments" unless one is planning on doing short term trading. 5 days of declining markets has damaged the morale of the bull - there is less talk of buying in the dips. Just imagine what will happen if we see a slow decline in the coming few weeks/months. Happy Trading Rajiv