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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: cfimx who wrote (911)	10/18/1998 6:05:00 PM
From: Freedom Fighter	Respond to of 1722

Twister, >>wayne, are they trying to outlaw Bear Markets? I mean we have had unprecedented returns for the last few years, 20+% ones. The market as defined by the S & P 500 was not even down for the year. People are going to expect this every time the market falters. Bad precedent.<< I agree with you completely. To be honest with you though, I don't know exactly why the Fed lowered rates. There's a lot of speculation about problems in the U.S. financial system that remain undisclosed. The Fed also has access to economic information that hasn't been released yet. I have two major problems with all this. It shows how leveraged up the financial system is in that a modest correction in asset prices is causing so much distress. Like you said, the stock market was still up for the year and Wall St. is having all kinds of problems. It verifies my view that we are in a bubble and that we probably face some serious problems in the future if in trying to keep it propped up we expand it further. The recent bull market is one part fundamentals and one part hype and air. Second, in supporting the asset bubble, either intentionally or not, the Fed is depriving some investors of the ability to make sound investments at prices that give some margin of safety and comfort. Cash is poor with interest rates falling, bonds are tough when the dollar is a phoney currency (in my view) and long rates are so low, stocks are very expensive, the gold market is semi-rigged. These are the worst of times for U.S. investors. I really don't understand the celebration of the bounce. When I need a new car or something, I pray for lower prices. I don't want rising prices. Only if you are looking to sell should you want higher prices. Even cashless long term investors should be hoping for a bear market because the companies they own will be able to buy in more shares at lower prices.