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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Joan Osland Graffius who wrote (23477)	8/6/1998 3:54:00 PM
From: Bonnie Bear	Read Replies (1) \| Respond to of 94695

Joan: re REITs: buying above replacement value increases their basis for depreciation- but labor costs are cutting into their profits. But something else is happening here- is there a fear of a derivatives collapse and default of debt? The trajectory the microcaps, REITs and utilities retrace are into 1993 valuations, when the country was in recession and interest rates were low. And they seem to correlate to each other very well. So in those sectors we may have another 20% downside, not more than that. But it casts a pretty ugly picture for where the Dow and S&P are headed. Goldman is filing for its IPO later this month..so we only have a few months of life left for the big guy. I'm getting more and more concerned about a collapse in the derivatives market. There's all these bonds that are tied to other debt instruments, and a massive debt default in the food chain could take down a string of huge banks in one big burp. The REITs as a sector would be vulnerable. The big banks can only hide it by gradually dropping interest rates and refinancing the debt. And occasionally claiming a victim. So I sold off some stuff into strength, treasuries are the only safe place in a derivatives collapse.