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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Michael Burry who wrote (2835)	12/20/1997 2:44:00 PM
From: jeffbas	Respond to of 78752

I still ask - is FNM about the only stock that could soar if interest rates tumble? Although I am thinking about checking into a leveraged T-bond position.

To: Michael Burry who wrote (2835)	12/20/1997 3:00:00 PM
From: Ron Bower	Respond to of 78752

Mike, I believe your point about consumer debt to be a big one, I would include corporate debt that is also very high. The Asian problems can flow to US banks causing them to tighten policies. The biggest concern now is asset depreciation. Companies have borrowed against assets that could be greatly devalued. An Asian company forced to sell a certain asset will devalue that asset to a US company. If the asset is devalued, the borrowings against it become overleveraged and the bank gets concerned. This forces the company to liquidate further devaluing the asset and problems over every company deep in debt. The highly liquid companies sit around and make the good buys. Anytime there's a downturn in the economy, those with cash gain while the companies with debt lose out. If you are sitting on cash, I give you a lot of credit. Very few are in that position now. The hardest part will be patience and putting it in the right places. I need to clarify an earlier comment about diversification. I strongly believe a person should NOT concentrate assets into any one area. This might seem a strange thing for me to say considering my Deswell position, but my market portfolio is only a small part of my assets. The majority is in a business I own and income producing properties. Because of the low interest rates, there are very few good buys around so I decided to put some cash in the market. I own bonds and other negotiable assets. After the early '80s experience, I try to stay liquid myself. For what it's worth, Ron