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In a message dated 98-04-07 03:43:03 EDT, you write:
<< The lesson I take from history is that overleverage is the cause in
almost every case, either on a personal basis (margin calls in 1929 and
later) or an institutional basis (Japan).
Do we see signs of overleverage? I don't yet, but I am concerned with
two.>>
Hi Daniel in Denmark, I believe this time the leverage is the massive amount
of financial futures trading.
<<One was humorously expressed today in the FT, where a columnists
predicted a severe bear market in 1999 caused by some nameless guy who
decides to retire at 55 based on the value of his equity-based
retirement assets, and starts selling. His friends and neighbors do the
same, and soon we have DOW 6,000. The facts are supporting a decrease in
normal savings in the US, which is offset by the greater investments in
stocks. >>
This will not be so humorous to the millions of 401(k) participants, but if
one is long on the demographic thesis, then this is what IS likely to happen.
When the median baby boomer reaches retirement age and starts taking money
out, that will signal the end of the huge money pump. The way the market
anticipates things, it will probably begin the decline some time before.
regards,
Easan
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