Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Winstar Comm. (WCII) -- Ignore unavailable to you. Want to Upgrade?

To: Bernard Levy who wrote (8641)	10/9/1998 9:28:00 PM
From: dougjn	Respond to of 12468

Bernard, great post. I'm not sure of 25% down. I am sure we'll break below Dow 7500 decisively. I don't get real comfortable before 25% down. Doesn't mean I wait until then to come back in strongly. I still think that is the most likely ultimate down point (more or less) before all this is over. Taking your points in order. a) What high inflation in the early 50's? But high inflation from about 70 through 85 or so (though last three years coming down heaps), yes. But inflation is not the only form of risk, and destruction of capital. So is a deflationary recession. Falling profits due to worldwide over capacity in many areas. That too can lead to an increased sense of risk. It clearly has. It could more so. I think it will. So all in all, I don't know that a return to the historical mean, at least, of PE's is not reasonable. The reasons I have not thought it could go below the mean, which one might otherwise expect could happen at a time of great challenge, does include the considerations you mention. b) Re: free market rhetoric is not the same thing as extreme free market action. Absolutely right, domestically. (Don't worry, I haven't been fooled.) The Republicans have basically signed on to FDR's and even Johnson's and Nixon's (yes, it's true) regulations of the market economy, and safety nets. With some (I thought much needed) reforms to welfare policy implementation recently. That's domestic regulation. Global capital flows are virtually entirely unregulated, red in tooth and claw, totally free market capitalism. Except for the very weakly capitalized, and not very well thought out, IMF. (Which was actually set up for a significantly different mission in a Gold Standard era, and adapted, without any very great deal of societal thought, to the current partly free market determined, partly pegged, currency exchange rate era.) c) Yes, of course, this is so far a mild bear market. That's exactly what I said to Limtex. Rather harshly, actually. d) You didn't label this next paragraph, but I will. I have said here, there, and everywhere, that I do not think the depths of the depression of the 30's are remotely likely now. For a host of reasons, including the ones you cite. But I also think some sort of recession, certainly in profits, is likely. Doug