To: Jacob Snyder who wrote (19530 ) 5/17/1998 8:41:00 PM From: jtechkid Read Replies (2) | Respond to
off topic- my doom and gloom theory. for the first time in history americans had more of their net worth in the stock market than any other instruments--ie real estate. the theory goes like this joe blow who works at xyz corporation has been investing a large percentage of his current income in the market isince 1994 and he has come to believe that the 27%annual return has increased his net worth that he believes at current growth he could retire in 10 years. he doesn't really understand why the rate of growth has been that great but he keeps seeing all those commercials from the mutual funds and they say keep investing and they seem pretty smart. Joe is feeling pretty good about himself and his stock statements show his net worth looks strong so with his retirement" is in the bank " joe decides to spend a lot more money on vacations, golf memberships, and whole bunch of new technology devices that are real cool. When he has to he puts some money on his credit cards thinking he always has money to pay it back in the future and his retirement of stock funds are doing well. today, even with a strong economy we have more credit card debt per capatal than any time in history. Joe, feeling great decides he knows enough about stocks to start trading his own money over E-TRADE. JOE spends an hour day investing in the yahoo and ktel because their relative strengths and technical charts look very strong. one day, greenspan says the economy is still heating up as people like joe keep spending money on a frenzy pace and decides to raise interest rates by .50 basis points. One of the main reasons the economy been strong is people like joe are feeling good about themself because their net worth-intangible-is a speculative bubble and he is on the perception it will continue to grow. well, the stock market declines 28% from today and joe is getting nervous because his retirement account or guaranteed money is starting to dwindle. now everywhere he reads the media is doom and gloom and one day he is just sick of it because he can't afford his stock account to go down anymore or how wil l he retire in 10 years. joe calls fidelity and liquidates his whole portfolio and decides to keep money in the bank like his parents. well, multiply joe times 30 million and this liquidy driven market is over. the market always goes to extremes and the same extreme as everybody in america in the market will ultimately end the complete opposite. when, this is the major question. BUT, ACCORDING TO first call this is the worst quarter companies have had in eps growth since 1991 even though this is the highest valuation the market has been. also, listen to the insiders of these companies. they are blowing out of stock like crazy and really no serious buying. check out barrons about insider buying.
