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

To: Peter Singleton who wrote (43362)	1/14/1999 12:03:00 PM
From: Bonnie Bear	Respond to of 132070

Peter: a point to ponder...the Dow and S&P indexes are not a fixed set of stocks, they are actually mutual funds with some turnover every year...notice how walmart replaced woolworth, for instance...the S&P smallcap index had 40% turnover in the past six months....so the difficulty in setting a future value on it is the problem of guessing how the voting machinery handles stock turnover in the index. For this same reason, it's best to buy a bit of "index fund" in any country where you think a capitalist system is likely to blossom in the next twenty years...where interest rates are very high but headed down...it may be like buying the S&P at 500...a little bit is enough for good risk/return if you have a long time horizon.

To: Peter Singleton who wrote (43362)	1/14/1999 12:39:00 PM
From: yard_man	Respond to of 132070

Others have done calculations to show it doesn't take a steep decline for the "negative wealth" effect to kick in big. If the DOW goes flat for a year, there'll be a large contraction in consumer spending -- very unlikely though, put me down for 6k this year and bottom of 4.5k sometime next -- will take some time to burn away the excesses ...