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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: don pagach who wrote (5162)	7/12/1998 10:44:00 AM
From: MikeM54321	Respond to of 9980

Don, Well the article didn't exactly say low interest rates were good for the stock market. That was really my personal conclusion. The article primarily was aimed at bond investors and it's conclusion was purchasing bonds right now was a good idea because rates were going to go lower in the future. I just didn't want to confuse the issue about where rates are probably headed. As for lower rates being good for the stock market, via stronger demand for companies products, lower borrowing costs for companies, etc., that is way beyond my current thinking. It's a matter of perception versus reality. I think you are trying to forecast, in reality, what do rates do for the bottom line of companies. I'm not attempting that because my time horizons are only out six months. I have a hard enough time figuring out what will happen in six months, let alone years. When I get into the "years out," time frame I've always messed up. The perception is strong that lowering rates makes the stock market rise. Raising rates makes it go lower. Perception is what counts in a six month time horizon. Interestingly enough (pun intended), your last statement about being in cash, "UGH," is exactly why lower rates are good for equities. You see you are probably frustrated because you know you are only earning about 2 or 3% on your cash, when you have seen the DJIA go up 15% over a six month period. That is, in reality, why lower rates tend to make stocks rise. Investors don't like earning only 3%. All IMHO. MikeM(From Florida)