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

To: Crimson Ghost who wrote (13360)	1/24/1998 12:12:00 PM
From: tekgk	Read Replies (1) \| Respond to of 18056

>> bond market would bomb when the Japanese stopped buying. In an August post here on SI I stated that it takes time for the herd to notice that the leaders have changed course (6-9 months). The Japanese government (and several others) stopped buying US paper in June or so (depending on how you interpret the Custodial account numbers) yet the flood of foreign money continued and even increased as a result of the panics in Asia. People continue with what was successful in the past until it fails. I did an informal survey a while back and found that some interesting results: the average investor does not know what a 10Q is, does not know what the companies they own shares in do, can not name the companies competitors, doesn't know if the company is making money or not. The only exceptions were those that bought shares in the companies that they work for and even here, their views of the companies finances did not match reality all that well. Actually most people just buy mutual funds and leave the thinking to someone else. The unfortunate problem is that the "someone else" is a kid with an average age of 28. The other main exceptions to this survey were SI posters and friends of mine that hold senior executive positions in large corporations. Neither of these groups is representative of the general population. On the economics front the average person has no clue what a current account deficit is, does not know the size of the trade deficit has no clue how the currency is doing against other currencies unless they have traveled abroad recently. If anyone knows of any real surveys I would love to read them. When traveling internationally I found that the situation was not much different internationally. My point is that most private foreign investors will not stop buying US bonds until they get burned at least once or until they simply run out of money. Although the dollar was weak last week I have only taken small positions to take advantage of this fact and market weaknesses (I try to remember to post my transactions here or the millennium thread - a few near term spx puts and some abx long leaps). I would rather miss part or even all of the ride than get run over by a truck. I am a slow learner and it has taken me many years of stepping in front of stampeding herds to develop an aversion to this action -g-.