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: Bilow who wrote (14789)	3/8/1998 12:48:00 PM
From: James F. Hopkins	Respond to of 94695

Carl; Re> Back when I was a kid, we thought our generation had invented sex. <<< LOL, at least you have a sense of humor.. As for mutual funds back then that would be like comparing the first horseless carriage to our modern auto. The press was so good back in the old days, that when reporters saw the first Wright Bro. flight, with their own eyes they were afraid to report it. What a few of the old generation could only dream about, the newer one has done. Some things even beyond the dreams of the 20s have taken hold, both good and bad. ------------------------- I've read J.K. Galbraith too..and some of his stuff is not to bad, but I would not use it as a map into the future. While some fiction writers of those days dreamed of ray guns, did any mention that surgery via a beam of light would become common place before the century was up ? Jim

To: Bilow who wrote (14789)	3/8/1998 4:32:00 PM
From: tekgk	Read Replies (1) \| Respond to of 94695

>> The nature of the market , mutual funds, lack of gold standard, futures, and options make comparing them such a total farce Carl here's a couple of more thoughts that I'd like to add to you eloquent response. The scale of 1929 losses was repeated almost exactly in the 70's. Both periods saw losses (constant dollar terms) of 75% over a 12-year period and a recovery to the top over a 25-year period. The surface manifestations were different but the end result was identical. History repeats itself almost exactly over and over again with the exception of a few minor twists to confuse the herd. History is full of episodes of overvalued market corrections. Even the once mighty and invincible Japan following the same precise pattern with 7 years down so far (and another 5 or so to go before a final bottom IMHO). They had a fiat paper currency and plenty of option and derivative markets just like we have now (which changed nothing). They entered the period as massive creditors with huge trade surpluses with one of the most productive and competitive economies ever seen on this planet - none of this mattered, they are sinking and will continue to do so until the earlier debt and valuations excesses are washed out of the system. Go back and look at some of the popular press articles in 1988 about how Japan would soon dominate the world and you will see that they were universally wrong. The Federal Reserve board, treasury and all the bureaucrats could not prevent the massive tumble in the 70's at a time when the US entered the period a creditor producing nearly 70% of the world's goods and services. Today we are less than a third (percentage terms) of what we were back then with a massive debt load of over 23 trillion (gov't+ private), massive trade deficits (indicating a fundamentally uncompetitive economy) and a majority share of the 60 trillion dollar world wide in derivatives market (mostly off the books and spinning out of control e.g. JPM). How will we forestall a correction this time when we could not then? A long term historical view shows that perpetual bulls and bears get slaughtered which is why over 90% of this nations wealth is held by around 5% of the population. The herd never has and history shows that it never will achieve financial independence. The popular press is now enamored with our invincibility because we managed to flatten an idiot who lined up his army in a nice neat straight line. I doubt future military conflicts will have enemies that are even remotely as stupid. I also doubt that the rest of the world will continue to accept a double-digit growth in our money supply to cover our current account and trade deficits and to prop up our markets with injections of liquidity while they suffer massive losses. They give us things, we give them debt paper and then we pay the debt with more paper rather than real goods and services - it's been a wonderful party, but it simple will not last, foreigners are not that stupid and they are all universally working and plotting strategies to end our reserve currency advantage. Even age old enemies in Europe are willing to cooperate to end our advantage and they are not the only ones (e.g. Mr. Yen calling for a new constitution and new "Bretton Woods", Chinese strategic papers identifying us as their enemy, Russians selling nuclear weapons to our enemies ...). The argument that they hold large amounts of our paper and would only damage themselves with such actions is not such a clear and simple argument. I believe that many of them would happily accept short-term losses and pain for long term advantage (BWDIK). The idea that we have entered a new era and have become invincible and are no longer susceptible to economic, political and military forces is nonsense. The market is overvalued by all historical measures and it will correct - the only question is how and when. IMHO the risk in the market is far too great for the potential rewards. After over a decade as a market bull I sold nearly all of my publicly traded stock last June when foreign central banks stopped pouring their money into US debt (posted publicly in SI) because I believe in the lessons on history. So far I have only missed a couple of hundred points on the DOW while earning interest in money market funds and on my nicely appreciating muni's with substantially less risk. If I miss a few hundred points - no big deal it sure beats waiting for 25 years for the market to return to old highs. I have kept my private holdings as a hedge. I can clearly see and understand the books of these companies unlike companies like AOL that regularly apologize for their accounting practices and often have their filings rejected by the SEC. The fact that these kinds of accounting practices are rewarded with higher stock prices by the stampeding herd is my single clearest indicator that we are in the final stages of mania.

To: Bilow who wrote (14789)	3/8/1998 4:41:00 PM
From: Mike M2	Read Replies (1) \| Respond to of 94695

Carl, the mutual funds of the twenties were called investment trusts one well known firm which is still well known had a trust that went from 100 to 1 . One of the most important similarities is both periods saw an inflationary expansion of money and credit which was reflected in the financial mkts not the ppi & cpi. Then as now most people were convinced the stock market was the place to be. I'm surprised the threads are so quiet after the INTC,MOT and CPQ pre-announcements- a sign ? of the bears capitulating because nothing seems to shake the mkt. I have a 1927 edition of Carret's book Chapter XXVII covers options and arbitrage! It read it so long ago I will take another look at it. Mike