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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: valueminded who wrote (27828)	4/30/1998 6:11:00 PM
From: Knighty Tin	Read Replies (2) \| Respond to of 132070

Chris, Higher rates are always a BIG problem for overpriced markets, as it throws a monkey wrench into valuation programs. Assuming anyone still has a valuation program. <G> Higher rates hurt just about everything indirectly, and some things directly. Financials are the most obvious losers, including banks, brokers, insurance cos. (less so than banks and brokers) and mutual fund management cos. Drugs and food are supposed to be defensive and able to withstand higher rates, as they are relatively price inelastic. But I think it won't work this time. That theory is based upon defensive issues commanding a markey multiple. At 2 to 3 times the market multiple, I think they will be about as useful defensively as The Maginot Line. These issues can all be done with indices, as they are pretty much group movers. Higher rates will kill tech stocks, too, but here, they do not move as a group. The internet index might be interesting, but other than that, I think you have to go for individual names. I hate the usual suspects here, MU, GTW, IBM, and MSFT. Not so well recognized is how much the travel and tourist industry depends upon low rates. Airlines and hotels will die if long rates go to 8%. Especially at current prices. MB