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

To: P.Prazeres who wrote (14103)	2/16/1998 4:55:00 AM
From: paulmcg0	Read Replies (2) \| Respond to of 94695

[maybe the bears are finally wiped out] Or, maybe they are just puzzled by the behavior of the average investor in the American markets. The economic fundamentals of our economy don't justify the bull markets we've seen over the last few years, like the S&P 500 going up over 30% in the last year, while according to official statistics (which might be suspect), the American GDP increased 3.9% while inflation was only 1.7%. There seems to be a national gambling mania for all things involving the markets -- people brag about their mutual funds, and a large percentage of the population seems to obsessed with stocks, as if Wall Street was some sort of national "get rich quick" scheme, while ignoring the risks of paying inflated prices for most stocks. And, there is a significant risk of a collapse in stock prices, particularly for tech stocks. For example, does anyone remember a couple of years ago when Madge Networks (ticker: MADGF) was the "hot" stock and was trading in the 40s? Now, it trades around 5 dollars per share. Or, what about those IPO sizzlers Boston Chicken (ticker: BOST) or Netscape (ticker: NSCP) ?? The readers of this message should get a quote on these stocks and see what I mean. I suppose all the bulls think they are market geniuses who sincerely believe they can get out of a stock if it starts a sharp decline, but they are going to be competing with a lot of people stampeding for the exit. Then, you have economic problems that are starting to become significant, such as the huge increase in bankruptcies to over 1.5 million last year because people could not pay their bills, particularly their credit cards. A large part of the so-called booming economy is based on debt -- many people and organizations are up to their eyeballs in debt.Examples include new homes funded with mortgages, a consumer buying binge using credit cards, and massive borrowing by government agencies. (Now, the city of Los Angeles is looking at bankruptcy because of the explosion in its borrowing went unchecked, according to the L.A. Times.) Call me anti-American, but I am happy because I paid all my debts, and thus owe nothing to anybody. The mood of America seems to be "Don't worry, be happy!" or "Party on, dude!". I even read somewhere that the Dow would have to reach 20,000 to equal the excesses of the Japanese markets that crashed a few years back, but I'm not convinced. I have a bad feeling about this market so I've opted out of it and no longer own any stocks. I would suggest though that people read about speculative investment manias, like the Dutch tulip mania or the South Seas Co. bubble, in volume 1 of Charles Mackay's 19th century work, "Memoirs of Extraordinary Popular Delusions". An electronic copy can be downloaded at no cost from Project Gutenberg's site at: ftp://uiarchive.cso.uiuc.edu/pub/etext/gutenberg/etext96/ppdel10.zip Paul McGinnis