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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Marty Rubin who wrote (8424)	5/5/1998 11:34:00 PM
From: Oeconomicus	Read Replies (2) \| Respond to of 18691

What will happen to all the inflow to 401(K) and other? They have to go somewhere.... Marty, why do you think the stock market is the only place workers would put their retirement money? In 1991, I went to work for a company that had 75+ people, mostly white collar, participating in a 401-k plan. Guess where about 2/3 of all the money in the plan was invested. Stock funds? No. Try GICs. As in Guaranteed Investment Contracts. When I asked people why, even people in their 20s and 30s, they all said the same thing - they didn't want to take any chances. After all, they were "guaranteed". Do they still have the same attitude? Of course not. This is the greatest bull market ever, right? Besides, I replaced the insurance company run plan with a Fidelity plan that didn't offer GICs. I hope you realize that participation in the market by the average Joe/Jane is at unprecedented levels. This is, of course, partly due to the proliferation of 401-k and similar plans, but it is also due to the bull market itself and the belief it has instilled in those saving for retirement or kids' college that the stock market (more particularly mutual fund investing) is a sure thing - that it can only go up and that their are no lower risk investments, just lower return ones. Remember that with unprecedented participation comes an unprecedented number of participants who have never seen a bear market. Hell, many of them have never seen anything more than a 10% correction. First, they will learn fear. Then, they will learn what a bond fund is. Good luck, Bob

To: Marty Rubin who wrote (8424)	5/5/1998 11:50:00 PM
From: Alias Shrugged	Read Replies (3) \| Respond to of 18691

Marty I have read statements similar to yours re: continued inflows of 401(k) dollars, where will they go, and shouldn't they be able to support the market. I have no basis to say this line of thinking is wrong; could very well be that this cashflow could hold the market up. My concern is not knowing how much of the recent rise in equity valuations has resulted from highly discretionary cashflows - namely, foreign investors, margin and other forms of borrowing, etc., which will leave this market for a variety of reasons (or become vaporized in a panicky downdraft).. With little knowledge of those cashflows, it is easy for me to believe that the current 401(k)/IRA/Pension money flows would stand little chance of supporting the current high valuations and heavy IPO schedule should those discretionary dollars leave. Good Trading Mike