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To: dumbmoney who wrote (39028)	9/25/1998 11:15:00 PM
From: Estimated Prophet	Respond to of 53903

<<Supply is expected to top demand by 2% this year and 1% next year, but demand is likely to outpace supply by 4% in 2000. Does anyone know what these numbers mean and how they are computed? In my limited understanding of economics, demand always equals supply (assuming constant inventory levels).>> It means that somebody has compared the estimated output of the product and the estimated consumption of the product, and come up with a percentage difference. It has no real meaning at all because the price is set at the margin where the demand and supply curves intersect, and price and cost signals are dependent on way too many variables to be able to forecast it well at all. Before any "imbalance" can occur the firms involved and the buyers involved will have interpreted the price signals in the market and an equilibrium will have occurred. Thus, the key for forecasting is to estimate price, which occurs at equlibrium, and any imbalances are always short-lived in an efficient market. Now, if the market isn't efficient, then the artificial imbalances have some meaning. If plants are all at full capacity, and new investment is necessary to address the imbalance, the imbalance may result in a benefit to the seller. But in the DRAM world, that is not now and will not be in the foreseeable future, a real problem for buyers of DRAM. Now, that's Econ 101. But it seems to be irrelevant to the people who have a vested interest in misleading the investing public that is more naive than you. EP