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: Berney who wrote (21056)	6/28/1998 12:25:00 PM
From: Vitas	Respond to of 94695

Berney, along the lines of the large caps outperforming, especially evident in this last rally, is that most of the other stocks are acting tired in a manner which suggests the coming of the 4 year cycle decline, while the large caps are in a tug of war between anticipating the same cycle bottom versus the beginning of the following 3-4 year cycle rally phase where these large companies will capitalize on their inroads into foreign lands such as China, Russia and a whole lot of others. Hence, they have and will continue to command a certain premium over their actual current earnings until that eventuality becomes real. Vitas

To: Berney who wrote (21056)	6/28/1998 12:30:00 PM
From: j g cordes	Read Replies (1) \| Respond to of 94695

Berney, US household stock ownership is currently at its highest since 1968.(Ableson, Barrons current issue. If you overlay ownership and stock market averages, performance was poor thereafter, though I wouldn't compare the causes then and now as being similar.. Vietnam spending and the Great Society played havoc with national debt... something we're still paying for with the dichotomy between Clintonism and the Repulican Revolution, whose only historical footnote might be that Monica didn't inhale. Last, I would caution that the logic many use of baby boomer savings underwriting a rising market is flawed by one simple fact. Markets are an arena of buyers and sellers, there is no value to any stock other than what someone is willing to pay for it. There is a correlation to cash inflows and most certainly the index funds have focused money to your BigBoyz (which is a great idea). Buyer beware! You can put all the money you want in a house, but if the market goes sour you'll only get the best bid. Jim

To: Berney who wrote (21056)	6/28/1998 1:23:00 PM
From: Bonnie Bear	Read Replies (2) \| Respond to of 94695

Berney: an interesting take on this is the source of the money. On Dr. Ed's stock market chart page there's some charts of central bank holdings and mutual fund flows. He shows that the money flow since 1994 (actually a lot longer) is dominated by foreign money flows, and that U.S. participation has dropped significantly since last October. The stats on the baby boomers is grim- they don't have any savings or investment. They probably only help the stock market by that 15% they pay on their credit-card debt. So the bubble is being inflated from foreign money. This must pose an interesting dilemma to Greenspan, who is dealing with a multinational stock market but only has responsibility for U.S. economics. There is no law against large multinationals printing huge amounts of money overseas and buying stock, or creating derivatives, it's out of the jurisdiction of U.S. laws. The chart shows the largest divergence between U.S. and foreign participation in 87 and 94. Foreign money was the last to get out. Another interesting chart is the volume of debt held by foreigners- it had a sharp reversal (hard to read chart, but it looks like last october again) and is headed down sharply. I thought the reason the banks were buying the brokerages was so they could cover their derivatives losses with the super-fast computer trading schemes of the brokerages, the game was to buy the brokerages with the fastest computers. I'm still hanging onto BSC as I expect them to be bought for a nice price. Pension plans buy the nifty fifty for one objective: they will buy companies that have sufficient cash flow to offer dividends in an economic downturn. So they don't care if the stock is a wasting asset as long as the future dividend flow is sufficient to serve the future cash flow needs of the pensions. The baby boomer pension will need periodic payments but will not necessarily need a lump-sum return of principal. So I'd venture to guess that deals have been cut with the nifty fifty and the pensions, the index may drop drastically but the dividends will increase. Sorry, but I'm not interested in following the big boys because the end objectives are different than mine. I do note that the U.S.-based pensions are moving to REITs in a big way, I'm willing to follow that one. At some point the composition of the S&P will be altered to reflect the change in focus.