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

To: Peter Singleton who wrote (46788)	2/12/1999 7:27:00 PM
From: Bonnie Bear	Read Replies (1) \| Respond to of 132070

nothing. russell index and reit index is already in a secular bear market. There's several markets that have very poor correlation to each other...the russell index, reit index, S&P, bonds, and international equities have different correlations to each other. If the russell goes any lower, lots of companies will go bankrupt and the composition of the index will change to reflect the ones that survive. When companies get absurdly below the price of their cash, buildings and bonds, and they still have good cash flow etc, either somebody buys them, rips them apart and sells the pieces for market value, somebody buys them and takes them private, or somebody larger buys them to increase earnings. Or eventually a mutual fund buys them and bids them up. All bets are off if we go to 15% interest rates, tho.

To: Peter Singleton who wrote (46788)	2/12/1999 10:37:00 PM
From: Merritt	Respond to of 132070

Peter: If the bear is precipitated by a crash, all stocks will decline. I don't have the reference, but I recall reading that after the '29 crash, most stocks declined until they had a dividend yield of about 10% - but federal interest rates were lower then than now. I suspect the reason stocks declined, and stayed at that level for a long time, was because the crash made people aware of how risky stocks were...of course that was two generations ago - and a new pair o' dimes, to boot.<G> REITS are a different story, as they usually more closely reflect the current interest rate, and general economic directions. But in a crash, they too will go down. Swiss government bonds would be my choice for capital preservation, and probable appreciation...especially if the crash is caused by something like Japanese repatriation of monies.