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I worked for Nikko securities at precisely that time. I can assure you the
US and european managers were more bullish than the Japanese themselves:
Who sold all the warrants: Japanese cies, who bought them: US and
Europeans. They did so at an accelerating pace once the Nikkei crossed
30.000. The Japanese mostly sold off old inventory at that time and
flipped the new IPOs.
As for bonds:
- Either the economy slows on its own, and yields will come down
- Or Greenspan will hike rates if markets race through highs again, and the
economy will eventually cool of.
The current decline is equivalent in percentage to the one of the 94 Peso
crisis, which is a fair price in my opinion, plus we are approaching levels
last seen at the last overheating. My guess is we are closer to 2000 lows
than to 2000 highs. May be a lot more so. Also, I don't think there have
been back to back negative return years in bonds so far. There is no reason
why should have one now.
FWIW
Gwenn
Daniel Goncharoff wrote:
> 'When Nikkei hit 40.000 nobody labeled it a bubble except a few
> weirdos.'
>
> Well, in Japan, maybe. In the west, nobody understood how growth rates
> in the teens could support PE ratios around 100. In the end, it
> couldn't.
>
> 'The truth is also, the majority is now seriously looking for valuation
> models. By majority, I mean the mainstream institutionals who invest
> more and more in tech and net, because of perf pressure and benchmarks
> (Yahoo in SP)
>
> My best guess is we'll start a major selection process, with leaders
> commanding premiums and the others falling through the floor.'
>
> Exactly! We are already seeing that with Amazon, now that higher sales
> has failed to translate into smaller losses, and other E-tailers, who
> throw VC money at customers in the vain hope they will come back, even
> when somebody else has a better deal tomorrow (good luck).
>
> 'My view is that rate fears are completely overblown.'
>
> There we disagree. I think the booming US economy will start to show
> more normal signs - - higher interest rates, higher wages, inflation.
>
> Regards
> DanG
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