Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Henry Volquardsen who wrote (1452)	4/4/1999 12:00:00 PM
From: Ahda	Respond to of 3536

Happy Easter Passover and many thanks to All on the thread.

To: Henry Volquardsen who wrote (1452)	4/4/1999 5:05:00 PM
From: Chip McVickar	Read Replies (1) \| Respond to of 3536

Henry and Thread, Lawrence Lindsey up to his old tricks Calling for the DJIA to drop 2-3000 points...poor earnings. Message 8695964 . There is no doubt the broad market has been weak since December '98.... The recent push to new highs is index driven and the result of only a few stocks moving higher....I think it's under 20% of all stocks? I make the suggestion that interest rates will fall modestly towards 5% and the broader market stocks will have an opportunity to regain some of their recent losses....So the market breadth will strengthen and the markets are about to see a new accelerated surge upwards. Henry, In 1stQ '97 rates = 7% by 1stQ '98 = 6%.... In the 3rdQ rates bounced off 5% and have moved up towards 6% into '99.... I've interpreted this move as a "natural balance" created by the interchange of European and Japanese central Banks selling US Bonds to facilitate their own needs. Also 5% was a natural area for profit taking. At this point I expect this process about to be accomplished and US interest rates to start looking at 5% again. Does this strike you as unreasonable? Chip

To: Henry Volquardsen who wrote (1452)	4/4/1999 10:25:00 PM
From: Enigma	Read Replies (1) \| Respond to of 3536

Henry - this was on GPM: From: Alex Sunday, Apr 4 1999 6:18PM ET Reply # of 31180 For US fund investors, the reality check's in the mail By BRIAN HALE American mutual fund investors will learn this week that the fabled bull-market emperor has no clothes. They are in for a shock when their fund managers' quarterly statements arrive in the mail. Most will learn that their US sharemarket investments barely earned a dollar over the first-quarter of the year. Many will discover that their equity mutual fund investments are actually worth less than at Christmas despite all the endless prattle about Dow 10,000. Lulled by the superficial focus on indicators such as the Dow Jones Industrial Average and the S&P 500, whose meteoric rises have been based on a few mega-stocks that have attracted increasing attention and switches as the rest of the market has slid into a correction turned bear market, most investors presumably still believe they are in a bull market. Indeed, that belief is widely thought to be the reason that the US savings rate has been negative in two of the past three months (and flat in the other). Many investors think their sharemarket investments will grow by 30 per cent a year so there is little point tucking away further savings. The truth, of course, is that two-thirds of all Nasdaq-listed stocks have fallen by 30 per cent or more from their 52-week highs along with more than half of all New York Stock Exchange share prices. The average share price has fallen 34 per cent on the NYSE boards and 42 per cent on Nasdaq and the average S&P 500 index stock has lost almost 23 per cent. Not that the existence of this bear market has stopped lots of commentators waffling about the "market" marching to new highs. Just as well they're not cricket commentators - they'd be carrying on about the best batsman's score and ignoring the fact that his team was being bowled out of the game. So far the mutual funds have not done as badly as the market because many of them have been dumping the average stocks and climbing on board the mega-stock bandwagon or have turned into momentum players or closet-indexers. Still, the general US equity mutual fund gained less than 1 per cent over the quarter while the average small-capitalisation stock-focused fund lost almost 6 per cent and the mid-cap and micro-cap oriented funds also lost money. Only indexed funds and growth funds managed anything near the S&P 500's quarterly rise of 4.6 per cent. None got anywhere near the Dow's 6.6 per cent gain over the quarter. Apart from technology funds, which boomed with all the Internet hype, the place to be in the first-quarter was in funds targetting Japan (plus 15.5 per cent), Latin America (plus 11.34 per cent) or Asia-Pacific (plus 8.8 per cent). Either that or the few companies whose share prices have risen meteorically. There aren't many. All the gains in the US market's most-watched index, the S&P 500, came from just 21 stocks and the bulk of the gains came from fewer than half that number. There were fewer big movers in the Dow. Just three stocks were responsible for more than half the Dow's almost 700-point rise to 10,000 points as well as giving the S&P 500 a big lift. In fact, just two stocks, Microsoft and America Online, were responsible for one-third of the S&P 500's rise to all-time record highs during the quarter and only one of the 10 best large-cap performers was not involved with technology, the Internet or telecommunications. It will be interesting to see whether equity mutual fund investors change tack when they review their quarterly results. If they follow the lead of their highly paid fund managers, they will dump their mutual fund investments and throw their money into the few mega-stocks that are not in the bear market that is ravaging the rest of the sharemarket. Traditional investment analysis would argue that it is too late to start buying Microsoft, which has more than doubled from $US41 a share to $US93 in the past six months, lifting its market capitalisation to around three-quarters of a trillion Aussie dollars and effectively valuing it at more than the entire Australian sharemarket. Traditionalists similarly would say it is too late to buy AOL which has soared from $US17 to $US149 over the past year and doubled from $US77 at the start of the first-quarter. To put this in context, AOL's market cap has risen by more than the total market value of News Corp, National Bank and BHP in the past four weeks and investors give it an overall market value equal to all those three plus Telstra, Commonwealth Bank, Westpac, AMP and ANZ. In a global context the online service provider/portal site now is the world's largest media company and in the US it is worth as much as the collective value of Disney, CBS and Viacom. Not bad for a company with profits of $US134 million ($211 million) last year compared with the $US2.5 billion earnings of the three US media groups. At least AOL makes profits. Last week saw the public listing of another Internet company that doesn't ... and, of course, it boomed. Priceline.com was floated at $US16 a share and went to $US85 on its first day before ending at $US69 with the first day's turnover, as usual, larger than the number of shares issued. By the end of the week it was back over $US80 with a third of its float changing hands every day. It finished the week with a market cap of $US11.4 billion - enough to make it the seventh-largest company in Australia. Not bad for a company that only 11 months ago started up an online auction site for tickets on a few of the smaller US airlines as well as bookings for a few hotels. Priceline.com lost $US114 million selling just $US35 million worth of tickets and rooms last year but investors have declared this clothes-less stock to be an emperor too. Its instant market cap is larger than the collective market value of the major US airlines whose tickets it doesn't sell, including giants such as United, Continental and Northwest Airlines. Forget new paradigm; the punters know it's not worth a cracker. They're just playing it for all it's worth until everyone realises that it and all the other emperors don't have any clothes. smh.com.au