Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: William H Huebl who wrote (14216)	2/20/1998 8:18:00 PM
From: Tommaso	Read Replies (2) \| Respond to of 94695

Bill, I am just watching and waiting for whenever, and for whatever reason, the new money going into mutual funds tapers off. There are about fifty million Americans who don't know anything about the stock market except that for the last three years everything you put into a mutual fund goes up 20% or more. If they ever get disappointed and either stop contributing or take a little bit out, the bubble will deflate very fast. Think about it literally. Mutual fund shares are nothing but unguaranteed paper that is backed up by stock certificates that are unguaranteed paper the yield of which is less than 1.5%. The yield is not even guaranteed; it's at the will of the company. It's all paper. And even the 1.5% yield is not backed by anything solid any more. It's not like a deed to a house or even like a guarantee to return a certain number of spendable dollars plus interest that you get with a government bond. It's all paper. Literally. And it's all only worth what the next buyer will pay for it. When suddenly there is not a next buyer, it may dawn on everyone how risky all this is. But Human beings can go on and on and on believing in things like the Holy Grail, the silver mines in Peru in the eighteenth century, and many other things. People have died by the thousands chasing after imaginary wealth. I forget who compared investors to a cloud of gnats that all went one way at once and nobody knew why. Now back in 1982 those pieces of paper represented ownership of real estate, factories, management teams, inventory, and cash in the bank. They still do, except that they are valued at five times the actual assets instead of maybe 1.5 times book value back then. Cheap and abundant credit is still here and as long as that is true a lot of that will chase after stock certificates. But that does not mean that they are a good value--only that there is a terrible and widespread misperception of actual worth.