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At 12:15 PM -0400 6/23/98, John Stevenson wrote:
>I think that "something different" is not something that's inherent in the
>market itself, but rather due to a unique set of circumstances: the US
>market is the only major market left standing (maybe the DAX too) and is
>still attracting huge inflows (as AJ stated), the (myserious?) absence of
>inflation where, near the end of a cycle and given tight labour mkts, it
>should be rearing its ugly head. The "fine balance" AG mentioned a few
>months ago between inflation & deflation (which, if I recall correctly, he
>said "could not be maintained indefinitely") may make the Asian disaster
>actually a plus (for now, barring further devaluations). The Bulls
>certainly are spinning that way, and in mkts (as in politics), perception
>is reality (up to a point).
I have seen charts that plot the market vs. the population of people of a
certain age group. The correlation was almost perfect. The reasoning is
that this age group is saving for retirement. The chart showed it
continuing for a few more years until the group starts retiring. It has
been the most convincing argument I have heard.
My theory is that the big money (and probably the government) is trying to
keep the S&P cash index in a trendless narrow trading range of 1075 to 1135
for a while. This keeps the public buying on dips, adding new money. It
allows the insiders enough trading room to continue to pump the money out
into their bank accounts. And this flat period gives the S&P earnings more
time to grow to lower the ridiculously high S&P PE ratio. The traders and
brokers make ridiculous short-term profits. The government gets 50% of this
in taxes. The public gets milked but gets continued long-term investment
stability for their savings. Everybody is happy. Good theory?
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