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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Stephen who wrote (14070)	5/15/1999 5:39:00 PM
From: Giordano Bruno	Read Replies (2) \| Respond to of 99985

Stephen, stock options, in the new paradigm, are really disguised pay and are not reflected in wage-increase calculations. Factoring in options as employment costs would result in significantly higher wage gains, higher inflation and higher PE ratios. But who's counting? <g> Jim

To: Stephen who wrote (14070)	5/15/1999 5:54:00 PM
From: j g cordes	Read Replies (1) \| Respond to of 99985

Stock options are only realized when exercised... perhaps you mean capital gains outside of wages? If that's the case, you'd have to examine those gains historically the same way wages & inflation have been compared. My guess is that there has always been a minority of investors who have substantial gains in the markets. However, I'll hazard also that a good percentage of that money is reinvested into new projects as seed capital or socked away in long term trusts or loaned out at various rates of return. Wage money on the other hand, is usually spent more quickly in the consumer marketplace, affecting the prices of goods and services. While its not fair, there's only so much you could reasonably buy if you for example had a ten million dollar stock option windfall. If you bought a Mercedes, a new porch, and a poodle you'd likely have an accountant try his best to shelter the rest from taxes. Therefore your question is, how does sheltered income from a booming stock market affect inflation?

To: Stephen who wrote (14070)	5/16/1999 11:20:00 AM
From: Stephen	Read Replies (2) \| Respond to of 99985

One comment that I would like to make with regards to the market is that whilst stocks maybe over-valued (imho only as in reality they are worth whatever anyone else will pay for them), the one aspect that disturbs me more than anything else is the extent to which the analyst community is fueling this 'irrational exhuberance'. It really is a disgrace that such a self-serving system should get to this level. There used to be a time when analysts would put forward meaningful commentary to justify any recommendation and this would usually be based upon fundamental reasoning provided by industry or company specifics. Now there seems to be recommendations provided for internuts, based purely upon PRICE expectation, lagging blue chips ... like KO & DIS ... just because they haven't kept pace with the market, even though their business situations remain tentative, value stocks ... because ...well, they are good value even if the small cap fund managers are seeing lots of redemptions ... etc, etc etc ... At the end of the day , J6P who is busy trying to earn a living, doesn't have enough time to look long & hard at things ... and the talking heads should be more accountable for the part they are playing in this (imho) 'bubble' when it bursts. Stephen