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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (32760)	9/24/1998 2:31:00 PM
From: GuyNixon	Read Replies (1) \| Respond to of 132070

MB: 1. Still remember your response to my post that you believed the US margin system is good to enough to pay us put holders back. Please forgive me for asking the same question twice. Just read this week's Barrons, an article stated that the biggest dealers have 30 billion in equity with 400 billion in potential derivative liability. With all those time bombs waiting to go off, do you still hold your view? What happen if some dealers suddenly go bust? 2. How about COF as a put target, it's one of the few domestic financials that are trading pretty close to its high. BTW, KRB is now around $30. Guy

To: Knighty Tin who wrote (32760)	9/25/1998 12:29:00 PM
From: Ilaine	Read Replies (2) \| Respond to of 132070

Hi Michael, The Guardian interviewed John Kenneth Galbraith on June 21, 1998, and while it may be old "news" I wish I had read it, and understood it, then, rather than recently: reports.guardian.co.uk THE OBSERVER: If you look at the return on capital in the G11 countries, it has been rising pretty consistently since 1982. But clearly the graph can't continue up forever. Do you think we might be at a turning point now? GALBRAITH: Profits have been very high and growing. But returns from owning common stock, particularly in the major companies, have actually gone down to nominal levels. Dividend income of major stocks is almost insignificant. To own common stock that has a wonderful capital value and no income is a slight anomaly that only the better financial minds can explain. Of course, Galbraith was speaking ironically, and, although I don't like his politics, he is one of the "better financial minds," I would say. I am in the middle of "The Great Crash," a terrific read, unlike Keynes "General Theory of Employment Interest and Money," where I am mired down in Chapter 2 and considering skipping ahead. OK, so it's getting harder and harder to accept that "the better financial minds" are, for the most part, acting rationally and honestly in their valuation of stocks. Were they lying? Were they trying to get us to take the dogs off their (brokers) hands? Are we going to be stuck with the functional equivalent of a bunch of tulip bulbs and shares of the South Sea Island company? Is it a swindle? It goes against my thrifty French nature to invest in a company that has never turned a profit, but I invested in companies that were returning solid profits, had been for years, that were already beaten down, and they keep dropping. So, I guess they were overvalued when I bought them. If the methods used by professional analysts to value such companies don't work, what will? I see you are a Wharton man, so you must have some good ideas. I mean, if it is a bubble, after the bubble bursts, what do we do to keep it from happening again? Bye for now, CobaltBlue