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While I hope Bruce is correct about the stock market going up for the
next ten years.....I thought I'd throw out a few buckets of "cold
water" to think about...........
1)Take 4 stocks out of the NASDQ 100 index (Dell,Msft,Intc,Cisco) and
what do you have????....I believe negative returns for the past 5
years...........
2)Have a recession and raise the unemployment rate by at least 1% and
see how much money "floods" the stock market(Will y2k be the
kick-off?)
3)What IF the the rest of the world economies recover???? How much
$$$ will go OUT of the USA to undervalued markets(Ask the Japanese how
this works).......
4)Ask someone who bought a house in L.A. ten years ago....how come
more people live in L.A. now....yet home values have dropped by
30%-60%(What about supply and demand?).....
5)Ask the manager of the Vanguard index fund (about $50 billion worth
of indexed money) if he is going to liquidate or borrow money to meet
redemption's...should they occur??????? (Do the numbers....IF this
fund needs to liquidate only 10% over a short period of time....each
S&P future is worth about $300,000...about 20,000 contracts just to
hedge 10% of their fund.....that would be a tough order to fill)
The market will drop when all scenarios are perfect. ALL markets
factor in the best
possible pricing well before the "bell rings". Have the markets
already factored in Bruce's scenario???? Will the next scenario to be
factored in, include some of the above situations???? I don't know.
I do know one thing......This market and every other market that you
will ever trade (including real estate, metals etc) have one thing in
common.......They "suck" in all of the available money because it
appears so easy to make....then the market "spanks" all participants
for thinking it is "so easy" and "riskless".......The great thing
about a stock market is that one can use a stop loss
in case they are wrong(Try putting a stop loss on the value of your
real estate, business, etc)
Just some thoughts.....
Tom Stein
comfut@xxxxxxx
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