To: JBL who wrote (18084 ) 9/24/1998 12:02:00 AM From: Rob S. Respond to
The overall situation has not changed much . . . the market is still benefiting from the follow-through of the past world-wide liquidity glut and the contraction that has started to occur overseas still has a long way to go and has only partially touched our shores. The (too) rapid (of) expansion after the collapse of the cold war resulted in inflated prices for stocks and massive increases in production capacity as fat egoed international banker and government talking-heads gloated their way to stardom - that in turn has caused the "supply side" economic equation to become unbalanced (one can argue that although the expansion was overdone, that the unbalance is only temporary - but in the context of worldwide socio-economic developments, the correction to the unbalance won't be this quick or painless; the current market correction has been mild and the major economic inefficiencies have hardly been rung out . . . yet). This is a relief and fantasy (suckers) rally - people are now looking for excuses to feel good and buy stocks. Greenspan hinted that the fed might lower interest rates by 1/4 point . . BFD! That was in the market already (helped to stop the decline). Greenspan also said that the reason the fed was changing it's orientation was because the foreign economies were much worse than previously thought and the effects on corporate profits and the overall US economy was going to be felt more than previously thought. . . Time to pick international stocks that are have grown to high valuations based significnatly on gains made overseas and be ready to short.
