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Reality is indeed what we make it. Now, I am not sure yet how to apply that in
the everyday markets: Is it that being so afraid of overvaluation it is already
discounted, or will it become so? Is that there may be inflation (which has been
the case for 4 years already) is already discounted or will it become so?
I tend to observe that at times when we most anticipated things, they were in
fact already fully discounted (good examples are pre-crash of 1987 euphoria,
post crash gloom, pre Gulf war start gloom or recently rate gloom in october
99). So I am wondering if inflation jitters are not more than discounted
already. After all bonds slumped more than for the Peso crisis which was a much
more threatening piece, and 99 was the worst or second worst year ever: I call
that exageration or at least great anticipation of the worst possible outcome,
and find it quite overdone. It is always when people most dread something
(y2k....) that that something is actually already in place, and things turn out
quite differently. Every body sees the wide gap between slumping bonds and
rising stocks, and everybody expects stocks to surrender. Press and analysts
coverage is unanimous on that matter. Well I venture to think, we might have a
sideways overall stock market (with lots of rotations) while bonds rise slowly
with the different Fed raises over the next months.
Then sometime in 2001 or 2002 it all boosts to big new highs again...
How about that?
mknapp@xxxxxxxxxxxxxx wrote:
> As a child, my mother used to chastise me that if I made faces, those faces
> would eventually stay that way. That's how I view inflation. Enough people
> are frowning inflation, it will eventually rear it's ugly head. Reality is
> what we make it. If we believe there's inflation, we WILL create it.
>
> scrunched facingly,
>
> Mike Knapp
>
> > -----Original Message-----
> > From: Gwenael Gautier [mailto:ggautier@xxxxxxxxxxx]
> > Sent: Tuesday, January 25, 2000 11:35 AM
> > To: realtraders@xxxxxxxxxxxxxxx
> > Subject: [RT] Re: Intra day hi in market, abondon ship
> >
> >
> >
> >
> > Dow has made no net movement in 9 months... As for Naz, it seems
> > Dow stocks
> > are
> > hit as badly by rate jitters than Naz. It is not that the Naz is
> > the badie,
> > and
> > Dow the goodie... They are all getting the same treatment, so what's the
> > point
> > owning old blue chips, if downside is same and upside is limited?
> >
> > If fund managers want to have performance, sooner or later they'll come
> > back to
> > where the growth is. Even more so in a high rate environment which will
> > make a
> > hell of a difference for GE, much less for JDS Uniphase. It is also to be
> > noted
> > that in a high rate environment, low margin or old world
> > businesses will be
> > even
> > more pressured to reduce costs, and will invest even more in tech to
> > achieve
> > that...
> >
> > In any case consensus never works, and right now consensus is Tech is too
> > high,
> > rates are rising, inflation is looming, value is undervalued. I
> > don't know
> > which
> > way things will go, but for sure it won't be the above.
> >
> > Just food for thought
> >
> > Gwenn
> >
> >
> > Daniel Goncharoff wrote:
> >
> > > ..which was the last trough. I think the bearishness is easily
> > explained
> > by
> > > the breakout of the Naz over the past three months. It has to stop
> > sometime,
> > > and once that happens, it will probably restrain the Dow around it.
> > >
> > > If the Naz dropped 100 points a week for the next 4 weeks, that would
> > only be
> > > a slight correction, and the Dow only has to hang out in the
> > 11500-10500
> > area
> > > to allow for some convergence.
> > >
> > > Regards
> > > DanG
> > >
> > > G
> >
> >
> >
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