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

To: wlheatmoon who wrote (42467)	1/7/1999 11:22:00 AM
From: Lucretius	Respond to of 132070

I disagree.

To: wlheatmoon who wrote (42467)	1/7/1999 11:51:00 AM
From: Mike M2	Read Replies (1) \| Respond to of 132070

Mike, while there may be no limits to man's greed and stupidity there are limits to a mania -it just seems like there are no limits. Consumer debt and spending cannot continue to grow faster than incomes. Stock prices cannot continue to grow faster than every measure of economic value and activity. Austrian economist F.A. Hayek said : " My chief objection to the prevailing ' macro-theory' is that it pays attention only to the effects of changes in the quantity of money on the general price level and not to the effects on the structure of relative prices. In consequence, it tends to disregard what seems to me the most harmful effects of inflation: the misdiredtion of resources it causes and the unemployment which ultimately results from it. " Look at SEA and Japan for an example of what happens when easy money fuels over investment. also keep in mind that the U.S. consumption binge fueled by debt and the wealth effect of the stock market has mitigated the adverse economic effects -FOR NOW. WHEN our bubble burst the world will be in for very tough times. BTW the austrian economists define inflation as an expansion of money and credit beyond the needs of economic activity and the supply of savings. Mike hohoho

To: wlheatmoon who wrote (42467)	1/7/1999 12:11:00 PM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

Mike, I totally disagree. There are many other much better opportunities than the overpriced fluff stocks in the US. Asia is dirt cheap. Latin America is cheap. Africa and Eastern Europe are near bottoms. Commodities are at multi-decade lows. Believe me, folks will find these areas again. Just as in the early years of this decade, nobody wanted to touch a US tech stock and "emerging markets" were the ONLY investment opportunity available (because they were then the overpriced area). This stuff changes and there are plenty of investment areas that offer much better risk reward tradeoffs than the US Nifty Fifty offers at this time. In fact, last year, when this manic junk was going to stratospheric pe ratios, markets in Korea, Spain, Portugal, Italy, Ireland, Greece, Germany and Denmark kicked our markets butt. A decade or so ago, you could buy third world stocks growing at 20% for 5-8 pe ratios. Then you went into a period where they were growing at 5% and selling at 20 times. The US was a better relative deal. But nobody wanted to hear it at the time. Right now, the third world and even European countries are mostly a berter deal than the US market. People do not want to hear it, of course. But, as our corporations continue to show little or no eps growth while multiples are at nosebleed levels, even the dumb money will eventually catch on that there are other places to be that offer a better deal. Never think there is no alternative to buying overpriced crap. You can join me and buy underpriced crap. <G> MB

To: wlheatmoon who wrote (42467)	1/7/1999 5:54:00 PM
From: Peter Singleton	Read Replies (2) \| Respond to of 132070

Mike, you said, <<Just thinking about how this market might be crazy, but maybe we're the ones who are unrealistic and shortsighted. The current explosion is unbelievable, but as most have already said, where are most people going to put their money? For the 25 year old who has grown up on the web/net, CNBC, cable television, telephone, presidential impeachment (had to throw that in), the stock market is and will be the place to invest for the next 25-40 years The recent overspeculation may be foolhardy, but the buy and hold investor in the year 2025 will have earned about 10-15% on his investments, regardless of what the market is today and what it does next year>> IMO, the flaw in your argument is you are taking the past 25 years of above trend performance and projecting it over the next 25 years. It may happen, but I wouldn't bet on it. Your argument is the same people made c. 1980 about oil prices, as folks on the thread have pointed out. People back then were looking at the previous 7 years and forecasting the same growth for the next few years. Someone who projected that oil prices, which had risen on the order of 500% in real terms over the previous 7 years, would fall over the subsequent 18 years to, in real terms, below the price before the oil crisis in 1973 would have had no credibility. None whatsoever, but they would have been correct. Also, as some folks here and elsewhere on SI have noted, there have been two times this century when equity investments made at market highs wouldn't have recovered to the purchase price in real terms for a couple of decades or more (1966 and 1929). Another thing that should give all of us more than a little awe and even fear is that we're at the crest of an equity market bubble that's an order of magnitude greater than that in 1929. Add to that a global economy, the only thing standing between us and a steep recession are the strong economies in the US and Europe ... oops, are those storm flags on the horizon? Peter