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

To: valueminded who wrote (54017)	3/31/1999 10:56:00 AM
From: Knighty Tin	Respond to of 132070

Chris, Richebacher is terrific, but we have to keep him in perspective. He is talking about long term economic moves and there is no doubt that America in the 1990s is committing many of the sins of Japan in the 1980s. But Japan's market kept going up for a long time before collapsing and R is not a timer. Me, either. (I know, DUH! <g>). Some folks are more bearish on money funds than I am. First, get a copy of your money fund's prospectus. If they are allowed to invest in P2 paper, dump it for another. But most P1 money funds are not a huge risk. Treasury only money funds are the safest, but also the lowest yielding. Govt. funds run the gamut. I don't see Fannie Mae or Freddie Mac paper as any safer than P1 paper, so I wouldn't take a lower yield to go to a govt. fund. No matter what I may think of the stocks, I am more than happy to lend money for a short period of time to GE, Merck, Hewlett-Packard, and other large firms with solid, diversified businesses. If the P1s start failing, I don't want to imagine the USA. And, if nothing else, the P1s credit rating will hold up long enough for us to sell and get into T-funds. I look for many lesser credits to have a hard time rolling their paper in the near future, just as they did in the 1970s. The yield spread between crap and solid will rise tremendously, adding costs to the crap cos. That means that some of your buddies will call you an idiot for being in a solid money fund while they are getting higher interest in a fly by night fund. This is one of the ways this debt explosion will come to kill the economy and the market. There are many borrowers and few lenders, so higher rates are the only way to attract the money they need to survive. And higher rates will kill eps that are already dead. There are many views on gold, but two bullish views are very different. One is the idea that the currency, financial system and the country are going to go to hell in a handbasket. Not a mere depression, but anarchy and chaos. The only way to get food for your family is to use gold and silver coins. Obviously, anyone who subscribes to this view will not want to hold paper gold stocks. That isn't my view. My view is that we will have a recession/depression where real stores of value, platinum, gold, silver, diamonds, etc. establish precedence over inflated paper assets. Precious stuff stocks will do better than the stuff itself due to the mfg. leverage. For example, there are many mines that are uneconomic to mine at current prices. Those become economic. Also, the cost to mine an ounce remains fairly constant or declines with the new technology, and that raises profits. That is my thinking on the precious stocks, not the doomsday scenario. However, keep in mind that I have a huge gun collection. If doomsday does hit, I have found a loaded gun to be a very valuable tool in collecting necessities for subsistence. If nothing else, I have a list of all the guys with gold coins whom I will visit. <g> Keane is certainly a spec. But the co. has eps up over 80% last year and another 40% up expected this year. It has a PE ratio of 18 times trailing 12 months earnings. I know that Y2K +1 will mean the loss of a lot of business, but the co. is introducing new products and has been landing a lot of 3 year and five year contracts. At this risk reward tradeoff, I am willing to play. I have made a lot of money on it in the past and may get creamed this time, but I like the potential vs. the risk. I own puts on CMB. BT is being taken out, so they are not a candidate. MB

To: valueminded who wrote (54017)	3/31/1999 12:04:00 PM
From: Mike M2	Respond to of 132070

chris, Richebacher saw the problems in SEA in advance -he wrote about it in his Sept. 96 and March 97 letters. He is not a timer but he was one of the few economists who saw the "Asian economic miracle" for the what it really was - a maladjusted bubble economy. Like many others he is surprised by the duration of this U.S. bubble but there is no doubt that the bubble will burst. The Austrian economists claim to be the only economic school which warned of the inevitable consequences of the excesses of the 20's before the crash. Mike