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

To: moonsparks who wrote (54572)	4/5/1999 3:03:00 PM
From: Knighty Tin	Read Replies (2) \| Respond to of 132070

Moon, Before I answer your new questions, I have some notes on reading material. First, the book whose title I didn't remember correctly was "Reminiscences of a Stock Operator." And I also recommend "The Money Masters," by John Train. The original, not the "New" one. And, the best book I read on analyzing the financial condition of companies was called "The Meaningful Interpretation of Financial Statements." I have no idea if it is still in print, but it was dry, but terrific. The short answer about techs and the macro cycle is yes. The longer explanation is that what we call technology is really a set of tools that allow us to do certain tasks efficiently (we hope <g>). True, some of these tasks are playing games and writing thank you letters to Aunt Sophie, but the majority are at least marginally related to business. Businesses are the largest buyers of computers and all the PC peripherals and software. They are also the only buyers, for the most part, of networking equipment. They install most of the high tech communications devices. They want the state of the art printers and conferencing products. And on and on. When business slows down, the first thing to occur is a clamp down on spending. You have to justify every nickle you spend five ways to Sunday and even then it may not be available. That isn't true in upturns. So, we see spending growth or even spending itself on high tech items trail off during a recession/depression. But macro factors are not all that is important. Obviously, if there is a breakthrough that businesses feel they have to have, it will record sales growth even during a recession. Conversely, if there is nothing new, as is the situation today, you can see a slowdown and, now, even negative growth in computer sales because businesses have boxes that will do all they need to do. They won't always buy just because the money is burning holes in their pockets. I think some grasp of macro economics is vital to understand the bond market, and some grasp of the bond market is vital to understand the stock market. How much? I think a reading of a couple of general books would be enought. You don't need to draw graphs and learn how to work for Larry Klein at Wharton Econometrics. But some basic concepts are pretty important. Since investing is supply and demand, micro econ is probably more important. But macro will help you determine where supply and demand is coming from. Generally, the 90% part of my 90/10 is comprised of money market funds. I will go out as far as two years of AAA or better notes, but that is rare. The main thing for that technique to work is to be able to reload when the markets run against common sense. The 90/10 in money funds allows me the most confidence for reloading. MB