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To: NucTrader who wrote (5836)	12/4/1998 9:15:00 PM
From: drsvelte	Read Replies (2) \| Respond to of 14427

Nuc: Longterm, baby boomers poop out about 2006-2009 or so. Still a lotta logs to burn.

To: NucTrader who wrote (5836)	12/5/1998 1:27:00 AM
From: 007	Read Replies (1) \| Respond to of 14427

Nuc, as long as the money pours into the market, the market will go up. But only as long as the market goes up, will the money pour into it. It's all a matter of psychology. When they see the next recession coming and the market falling, they will continue to invest in their retirement by stopping the money flow into stocks and moving it into other vehicles. This bull has lasted so long that people automatically assume that retirement money will flow into the stock market. But what happens when the stock market starts destroying retirement money? Precisely because of all the baby boomer retirement money in the market, the next recession is going to be nasty and the next bear is going to be grizzly. Think about why that is so. Conventional wisdom says that there's all this money on the sidelines waiting to pour in on the proverbial next dip. The facts show a negative savings rate, so how is that pool of money going to grow? The irony is that more savings will be necessary, but when the savings rate trend shifts to approach the average of 5-7%, consumption will fall and we'll be well on our way to a recession. And with a pessimistic outlook, the market will fall regardless of money market balances. The amount of capital outside of the stock market will grow and grow. Eventually, the pundits will change their tune and see that as a negative for the stock market. This sidelined capital will find a home elsewhere. The whole house of cards depends on consumer confidence and investor sentiment. Either one can destroy the other as they are both intertwined, and most importantly, they are both very fickle. Look how quickly the psychology changed this summer, and then back again under Greenspan's direction. But at some point, consumer confidence and investor sentiment are not salvageable. Even rate cuts can be bearish. The difficult part is to know in advance when and why a long-term change in psychology will occur. Will it be Latin America? Will it be a gradual cyclical downturn? Will it be some unforeseen combination of events? Whatever it is, it will happen when most people do not realize it. Is it happening now? OO7