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Anyone having a chart showing the potential correlation between money supply
and stock valuations?
Is there one? what prompts people to invest is when they have extra money. What
prompts them to sell, is when they don't have enough. of course there are the
short term panics etc, but long term isn't it what is happening in Japan:
People had too much until 1989, and now not enough at all...
In the US, now people have "too much", and are "forced" to invest. So all there
should be to watch is signs there will not be enough. Typically one starts
lacking money when returns or revenues drop and you need to pull equity, or
when you are already overextended. You have then to liquidate some, but if
several are in the same situation, whom do you sell to? Hence lower prices.
Interestingly, with the Asian story on, corporate profits should stagnate at
best. Also with Europe showing more strength, there is more competition as
well. These are not good signs
Very often, there is one last fake rally that pulls the last passengers in,
those, that had resisted up to then. Today, these are most likely people who
have sold too early because of similar earlier concerns, and elect now to get
back in. I don't know, but I haven't had this feeling yet, although we might
beclose to it.
Longer term, there is no doubt in my mind, the PC revolution is as big as the
invention of script. We haven't seen anything at all yet. But like for all
major major changes in global life styles, there should be again big turmoil,
including highly volatile stock prices. My best guess is we will fluctuate
erratically between 5.000 and 10.000 on the DJ for the next ten years or
more... So many opportunities!!!
BTW, I am no CTA, not registered, and not solvent anyway in case someone wants
to sue me for a million $ because my vision was wrong... Too bad for him, I
couldn't care less!
:-))
Gwenn
John Stevenson a écrit:
> I refer to the Jerry Favors analysis as stated last friday (5 June) on
> CNBC. I think I heard him say that the mkt needed a week of big volume, and
> needed to set new highs above the mid-May intraday high of 9312 or else. .
> .that mid-May high would represent the "final top" of the astounding Bull
> mkt we've witnessed for the past 2-3 years, and that a plunge would occur
> within 107 +/- 5 calendar days from that top. I think it's safe to say that
> the rally isn't happening.
>
> I think it's high time that ALL investors pull their noses out of their
> charts for a time, and take a REAL GOOD look at some fundamental questions:
>
> 1. Do you believe in the so-called "New Paradigm"?
> (If you do I think you're probably beyond help at this point, but how can
> you justify a New Paradigm, and engage in technical anaysis based on models
> generated from the "Old Paradigm(s)"?)
>
> 2. What happens, based on historical empiricism, when prices rise, and
> earnings fall?
>
> 3. If the "fundamentals" of the Economy can be reduced to "a low rate of
> inflation" (as Bulls want us to believe), what about the other
> "fundamentals" that tell a radically different story? (ie: balance of
> trade, mkt internals, shrinking profits, chaos in foreign mkts, blazing GDP
> growth. . .etc.)
>
> 4. Does laying off 1000's of workers really constitute an "increase in
> productivity", or merely a short term boost to the bottom line (and the
> stock price), to be inevitably followed at some indeterminate time by an
> erosion of product and/or service quality? Is erosion of quality deferred
> inflation?
>
> 5. Do the PPI and CPI really measure inflation (defining same as: an
> erosion of purchasing power due to an expansion of the money supply), or
> have they become easily manipulated tickets to popularity for politicians,
> and sales tools for Mutual Funds?
>
> I would like to stimulate some discussion of these potentially
> earth-shaking matters in lieu of the usual formulae tweaking comments that
> are of interest in the micro arena, but may lead to tunnel vision in the
> macro arena.
>
> Anyone care to wade in. . .?
>
> A scientist un-accustomed to seeing Natural Law (if same is present in Mkts
> at all) re-written by ravingly optimistic ad copy. . .
>
> John D.Stevenson
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