From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #3012 Reply-To: canslim Sender: owner-canslim-digest@lists.xmission.com Errors-To: owner-canslim-digest@lists.xmission.com Precedence: bulk Content-Transfer-Encoding: quoted-printable X-No-Archive: yes canslim-digest Tuesday, October 29 2002 Volume 02 : Number 3012 In this issue: RE: [CANSLIM] OT 7 RE: [CANSLIM] Inflation Confined RE: [CANSLIM] Hangover (was OT 7) RE: [CANSLIM] Hangover (was OT 7) RE: [CANSLIM] OT 7 Re: [CANSLIM] Inflation Confined ---------------------------------------------------------------------- Date: Tue, 29 Oct 2002 15:11:18 -0800 (PST) From: Eric Jaenike Subject: RE: [CANSLIM] OT 7 - --0-355457295-1035933078=:52634 Content-Type: text/plain; charset=us-ascii Just a quick note on one point you raised, re: inflation and money supply (just how much more OT we can get, I don't know, but what the heck). The following is excerpted from a speech given by Bill Fleckenstein, a hedge fund manager: "it is only in a period of low inflation that the monetary spigots can stay open long enough to foment a bubble... We have created over-capacity and precipitated massive speculation just as we did in the twenties. Inflation has been held in check not by prudent monetary policy but by a unique combination of events. In addition to the post cold war boom and NAFTA, the enormous productivity gains achieved by the massive invasion of powerful microprocessors into our lives conspired to keep CPI inflation in check, just as innovations such as autos, planes, and fractional horsepower electric motors suppressed inflation in the 1920s. Instead of CPI inflation we have created asset inflation in the form of the largest stock market bubble of all time". The basic point, of course, is that productivity gains have a deflationary influence. The fact that we experienced an increase in CPI is a result of increases in monetary supply overwhelming the deflationary influences of productivity. Jeez, I think I just put myself to sleep. For those interested, Fleckenstein will be on Kudlow and Cramer tonight. Eric Mike Gibbons wrote:Hi Rich, Yes, I agree with you that managing the stock market is not explicitly within the terms of reference of the Fed, unless one extends the meaning of "stable prices" to include "stable stock prices", which I think would be a stretch. To bash Greenspan for failing to manage what he is not mandated to do is just silly. However, it is fair to say that he should have forseen the longer term effects that "irrational exuberance" would have on output and employment in the longer term and taken whatever measures he could have to constrain the exuberance. I understand that one simple option would have been to increase constraints on margin borrowing which was within his power. Whether or not this would have had a significant effect is debatable however. It seems to me that we should look to the failure of other institutions, such as the SEC and the congress that failed to support the reforms that Arthur Levitt wanted to introduce, and the accounting industry that permitted outright lying in financial statements to fuel expectations. But ultimately, the fault lies with us. We get the government (and oversight) we vote for, and if we are foolish enough to buy a stock at 500 times earnings, because we believe in the greater fool theory, then we only have ourselves to blame when the bubble bursts. (No one in this group of course). As for the critique that the money supply spigot was opened too wide, then if so, surely we would have seen more general inflation than we have seen? Inflation has been mainly confined to specific areas of the economy, such as housing (recently due to low interest rates) and medical care. "Maestro" explains how Greenspan convinced Clinton that the most important thing he could do for the economy was to eliminate the deficit and I think we saw the benefits of that policy in the late '90's. IMHO, an announced return to that objective would have a significant effect on investor and consumer confidence. Aloha, Mike Gibbons Proactive Technologies, LLC http://www.proactech.com - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Rich Mau Sent: Tuesday, October 29, 2002 9:45 AM To: canslim@lists.xmission.com Subject: RE: [CANSLIM] OT 7 There seems to be a general belief that Greenspan's ( and the Federal Reserve's) job is to manage the growth rate of the stock market. This is not the case. I do not doubt that what they do affect the market, but that is not what they are supposed to be working on. The actual job of the Federal Reserve is: "to promote "maximum" output and employment and to promote "stable" prices." Now, whether they have done this well is a question for discussion. more at: http://www.frbsf.org/publications/federalreserve/monetary/goals.html > -----Original Message----- . . . > Rather than bashing Mr. Greenspan, we investors/traders need to > examine what happened in the late 90s stock market run up . . . - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. - --------------------------------- Do you Yahoo!? HotJobs - Search new jobs daily now - --0-355457295-1035933078=:52634 Content-Type: text/html; charset=us-ascii

Just a quick note on one point you raised, re: inflation and money supply (just how much more OT we can get, I don't know, but what the heck). The following is excerpted from a speech given by Bill Fleckenstein, a hedge fund manager:

"it is only in a period of low inflation that the monetary spigots can stay open long enough to foment a bubble... We have created over-capacity and precipitated massive speculation just as we did in the twenties. Inflation has been held in check not by prudent monetary policy but by a unique combination of events. In addition to the post cold war boom and NAFTA, the enormous productivity gains achieved by the massive invasion of powerful microprocessors into our lives conspired to keep CPI inflation in check, just as innovations such as autos, planes, and fractional horsepower electric motors suppressed inflation in the 1920s. Instead of CPI inflation we have created asset inflation in the form of the largest stock market bubble of all time".

The basic point, of course, is that productivity gains have a deflationary influence. The fact that we experienced an increase in CPI is a result of increases in monetary supply overwhelming the deflationary influences of productivity.

Jeez, I think I just put myself to sleep.

For those interested, Fleckenstein will be on Kudlow and Cramer tonight.

Eric

 Mike Gibbons <mike@proactech.com> wrote:

Hi Rich,

Yes, I agree with you that managing the stock market is not explicitly
within the terms of reference of the Fed, unless one extends the meaning of
"stable prices" to include "stable stock prices", which I think would be a
stretch. To bash Greenspan for failing to manage what he is not mandated to
do is just silly. However, it is fair to say that he should have forseen the
longer term effects that "irrational exuberance" would have on output and
employment in the longer term and taken whatever measures he could have to
constrain the exuberance. I understand that one simple option would have
been to increase constraints on margin borrowing which was within his power.
Whether or not this would have had a significant effect is debatable
however. It seems to me that we should look to the failure of other
institutions, such as the SEC and the congress that failed to support the
reforms that Arthur Levitt wanted to introduce, and the accounting industry
that permitted outright lying in financial statements to fuel expectations.

But ultimately, the fault lies with us. We get the government (and
oversight) we vote for, and if we are foolish enough to buy a stock at 500
times earnings, because we believe in the greater fool theory, then we only
have ourselves to blame when the bubble bursts. (No one in this group of
course).

As for the critique that the money supply spigot was opened too wide, then
if so, surely we would have seen more general inflation than we have seen?
Inflation has been mainly confined to specific areas of the economy, such as
housing (recently due to low interest rates) and medical care.

"Maestro" explains how Greenspan convinced Clinton that the most important
thing he could do for the economy was to eliminate the deficit and I think
we saw the benefits of that policy in the late '90's. IMHO, an announced
return to that objective would have a significant effect on investor and
consumer confidence.

Aloha,

Mike Gibbons
Proactive Technologies, LLC
http://www.proactech.com


-----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Rich Mau
Sent: Tuesday, October 29, 2002 9:45 AM
To: canslim@lists.xmission.com
Subject: RE: [CANSLIM] OT 7


There seems to be a general belief that Greenspan's ( and the Federal
Reserve's) job is to manage the growth rate of the stock market. This is not
the case. I do not doubt that what they do affect the market, but that is
not what they are supposed to be working on.

The actual job of the Federal Reserve is:

"to promote "maximum" output and employment and to promote "stable" prices."

Now, whether they have done this well is a question for discussion.

more at:

http://www.frbsf.org/publications/federalreserve/monetary/goals.html

> -----Original Message-----
. . .
> Rather than bashing Mr. Greenspan, we investors/traders need to
> examine what happened in the late 90s stock market run up . . .


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Do you Yahoo!?
HotJobs - Search new jobs daily now - --0-355457295-1035933078=:52634-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Tue, 29 Oct 2002 18:04:07 -0600 From: "Fred Richards" Subject: RE: [CANSLIM] Inflation Confined This is a multi-part message in MIME format. - ------=_NextPart_000_005A_01C27F75.93162B40 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: 7bit If that is the case, why does my wife want 20% more money for our weekly groceries over last year. Mike, they have changed the CPI calculations 8 times since 1996. And who really knows what they are counting. -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Mike Gibbons Sent: Tuesday, October 29, 2002 4:59 PM To: canslim@lists.xmission.com Subject: RE: [CANSLIM] Inflation Confined Hi Gene, No, we're no different. I didn't mean to say that there was no inflation, just that the rate of inflation is relatively low. According to the BLS (which one could choose to distrust, of course, or argue,validly, that it its not a representative number) the overall increase in the CPI over the last 12 months for all cities was 1.5% while the increase in medical care was 4.6%. Aloha, Mike Gibbons Proactive Technologies, LLC http://www.proactech.com -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Gene Ricci Sent: Tuesday, October 29, 2002 12:53 PM To: canslim@lists.xmission.com Subject: [CANSLIM] Inflation Confined Mike maybe Hawaii is different but have to disagree with.... "Inflation has been mainly confined to specific areas of the economy, such as housing (recently due to low interest rates) and medical care." they're just not counting anymore..... Heck, everything has gone up.... just check insurance and property taxes.... Gene - ------=_NextPart_000_005A_01C27F75.93162B40 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
If=20 that is the case, why does my wife want 20% more money for our weekly = groceries=20 over last year.
 
Mike,=20 they have changed the CPI calculations 8 times since 1996. And who = really knows=20 what they are counting.
-----Original Message-----
From:=20 owner-canslim@lists.xmission.com=20 [mailto:owner-canslim@lists.xmission.com]On Behalf Of Mike=20 Gibbons
Sent: Tuesday, October 29, 2002 4:59 = PM
To:=20 canslim@lists.xmission.com
Subject: RE: [CANSLIM] Inflation=20 Confined

Hi=20 Gene,
 
No,=20 we're no different. I didn't mean to say that there was no inflation, = just=20 that the rate of inflation is relatively low. According to the BLS = (which one=20 could choose to distrust, of course, or argue,validly, that it its not = a=20 representative number) the overall increase in the CPI over the last = 12 months=20 for all cities was 1.5% while the increase in medical care was=20 4.6%.
 
Aloha,
 
Mike = Gibbons
Proactive = Technologies,=20 LLC
http://www.proactech.com
-----Original Message-----
From:=20 owner-canslim@lists.xmission.com=20 [mailto:owner-canslim@lists.xmission.com]On Behalf Of Gene=20 Ricci
Sent: Tuesday, October 29, 2002 12:53 = PM
To:=20 canslim@lists.xmission.com
Subject: [CANSLIM] Inflation=20 Confined

Mike maybe Hawaii is different but = have to=20 disagree with....
 
"Inflation has been mainly confined to specific areas of the = economy,=20 such as housing (recently due to low interest rates) and medical=20 care."
 
they're just not counting=20 anymore.....
 
Heck, everything  has gone = up.... just=20 check insurance and property taxes....
 
Gene


- ------=_NextPart_000_005A_01C27F75.93162B40-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Tue, 29 Oct 2002 16:13:54 -0800 From: "Rich Mau" Subject: RE: [CANSLIM] Hangover (was OT 7) I agree with you, particularly about blame. It would be nice if it were really Greenspan's fault (or the Democrat's fault or the Republican's fault, or . . .). Then we could just change that person (or group) and all would be "fixed". But rather a whole bunch responsible people (some of which are looking at a computer screen right now) did things that were ,at least in hindsight, not very wise. Now we have the morning-after hangover while looking for someone to blame. Rich > -----Original Message----- > From: owner-canslim@lists.xmission.com > [mailto:owner-canslim@lists.xmission.com]On Behalf Of Mike Gibbons > Sent: Tuesday, October 29, 2002 2:34 PM > To: canslim@lists.xmission.com > Subject: RE: [CANSLIM] OT 7 > > > Hi Rich, . . . > But ultimately, the fault lies with us. We get the government (and > oversight) we vote for, and if we are foolish enough to buy a stock at 500 > times earnings, because we believe in the greater fool theory, > then we only > have ourselves to blame when the bubble bursts. (No one in this group of > course). . . . > Mike Gibbons - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Tue, 29 Oct 2002 20:50:48 -0500 From: "Rocky Sanghvi" Subject: RE: [CANSLIM] Hangover (was OT 7) Not to create a lasting hangover but the repertoire of central bank intrigue, speculative bubbles, defaults, devaluations, bank rate manipulations, deflations and inflations constitute the essential arsenal being used by economic warfare planners today. Excerpted from AGAINST OLIGARCHY Essays & speeches 1970-1996 by Webster G. Tarpley PART 7 (Excerpt) THE FEDERAL RESERVE: CAUSE OF DEPRESSION One of the main causes for the Great Depression was the Federal Reserve System of the United States. Many naive persons think of the Federal Reserve System as a part of the United States government, which it emphatically is not. Probably this is because the only money we have nowadays is marked "Federal Reserve Note." The Federal Reserve is a privately owned and privately managed institution. Those who can remember the 1960's can recall that there were one dollar silver certificates as well as United States Notes, the descendants of Lincoln's greenbacks, in several denominations. But after the Kennedy assassination, the private Federal Reserve established a monopoly on printing American money, shutting out the US Federal Government from this important function. In this way the Federal Reserve System violates the letter and spirit of the United States Constitution. There, in Article I, Section 8, Clause 5 we read that the Congress shall have the power "to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures." The Federal Reserve was created in December, 1913 when Woodrow Wilson signed the Glass-Owen Federal Reserve Act. That bill had been the product of cloak-and-dagger machinations by Wall Street financiers and their political mouthpieces, many of them in league with the City of London. Wall Streeter Frank A. Vanderlip, in his autobiography "From Farm Boy to Financier" narrates that the secret conference which planned the Federal Reserve was "as secret - indeed, as furtive - as any conspirator." Vanderlip was one of the insiders invited to the Jekyl Island Club on the coast of Georgia in the autumn of 1910 by the Senator Nelson Aldrich, the father-in-law of John D. Rockefeller Jr. Aldrich also invited Henry Davison of J.P. Morgan & Co., and Benjamin Strong, the future Governor of the New York Federal Reserve Bank. Also on hand was Paul Warburg of the notorious international banking family, descended from the Del Banco family of Venice. As Vanderlip recounted, "We were instructed to come one at a time and as unobtrusively as possible to the railway terminal on the New Jersey littoral of the Hudson, where Senator Aldrich's private car would be in readiness, attached to the rear end of a train for the South." On Jekyl Island this crew began to decide the main features of the central bank of the United States: "We worked morning, noon, and night....As we dealt with questions I recorded our agreements...If it was to be a central bank, how was it to be owned - by the banks, by the Government or jointly ? When we had fixed upon bank ownership and joint control, we took up the political problem of whether it should be a number of institutions or only one." In the end, says Vanderlip, "there can be no question about it: Aldrich undoubtedly laid the essential, fundamental lines which finally took the form of the Federal reserve law." Today each of the twelve Federal Reserve Banks - Boston, New York, Chicago, San Francisco, and so forth - is a private corporation. The shares are held by the member banks of the Federal Reserve System. The Class A and Class B Directors of each Federal reserve Bank are elected by the shareholders from among bankers and the business community, and other Directors are appointed by the Federal Reserve Board in Washington. Members of the Board of Governors of the Federal Reserve System in Washington are chosen by the President and must be approved by the Senate, for what that is worth. But when we come to the vital Federal Reserve Open Market Committee, which sets short-term interest rates and influences the size of the money supply by buying or selling government securities, the picture is even worse. The FOMC comprises 7 Fed Governors from Washington plus 5 presidents of Federal Reserve Banks appointed by the respective Directors of these banks. In practice, 5 Federal Reserve district presidents who have never been seen by the President or the Congress have a vote on setting the credit policy and money supply of the United States. Public policy is made by a private cabal of self-appointed plutocrats. How was this sleazy product marketed to the Congress ? Interestingly, the Congressmen were told that the Federal Reserve System would prevent panics and depressions like those of the 1870's and 1890's. Here is a sampling compiled by Herbert Hoover of selling points used by lobbyists seeking votes for the Federal Reserve Act: We shall have no more financial panics....Panics are impossible....Business men can now proceed in effect confidence that they will no longer pu their property in peril....Now the business man may work out his destony without living in terror of panic and hard times....Panics in the future are unthinkable....Never again can panic come to the American people. [The Memoirs of Herbert Hoover, p.7] The verdict of history must be that the Federal Reserve has utterly failed to deliver on these promises. The most potent political argument against this arrangement is that it has been a resounding failure. Far from making financial crises impossible, the Fed has brought us one Great Depression, and it is about to bring us a super-depression, a worldwide disintegration. The Federal Open Market Committee was not part of the original legislation that created the Federal Reserve System. But in the early 1920's, some regional Federal Reserve Bank presidents, inevitably dominated by New York, formed a committee outside of any law to coordinate their activities in determning the money supply and interest rates through buying and selling of government securities - i.e., open market operations. This was a very successful power grab by the regional Reserve Bank leaders, all directly chosen by bankers and the private sector, and not subject to approval by anyone in Washington. In 1935 Franklin D. Roosevelt very unwisely signed a Banking Act which legalized the Federal Open Market Committee in its present form, with a formal majority for Federal Reserve Board Governors in Washington, the ones proposed by the President and approved by the Senate. But at the same time the Secretary of the Treasury, who used to be a member of the central Board, was ousted from that position. If you're interested in more of this please send me a separate email or search the net. Best Wishes, Rocky - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com] On Behalf Of Rich Mau Sent: Tuesday, October 29, 2002 7:14 PM To: canslim@lists.xmission.com Subject: RE: [CANSLIM] Hangover (was OT 7) I agree with you, particularly about blame. It would be nice if it were really Greenspan's fault (or the Democrat's fault or the Republican's fault, or . . .). Then we could just change that person (or group) and all would be "fixed". But rather a whole bunch responsible people (some of which are looking at a computer screen right now) did things that were ,at least in hindsight, not very wise. Now we have the morning-after hangover while looking for someone to blame. Rich > -----Original Message----- > From: owner-canslim@lists.xmission.com > [mailto:owner-canslim@lists.xmission.com]On Behalf Of Mike Gibbons > Sent: Tuesday, October 29, 2002 2:34 PM > To: canslim@lists.xmission.com > Subject: RE: [CANSLIM] OT 7 > > > Hi Rich, . . . > But ultimately, the fault lies with us. We get the government (and > oversight) we vote for, and if we are foolish enough to buy a stock at 500 > times earnings, because we believe in the greater fool theory, > then we only > have ourselves to blame when the bubble bursts. (No one in this group of > course). . . . > Mike Gibbons - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Tue, 29 Oct 2002 20:52:22 -0500 From: "Rocky Sanghvi" Subject: RE: [CANSLIM] OT 7 This is a multi-part message in MIME format. - ------=_NextPart_000_00E1_01C27F8D.14441E40 Content-Type: text/plain; charset="us-ascii" Content-Transfer-Encoding: 7bit Eric, I agree. Good posts - appreciate it. Rocky - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com] On Behalf Of Eric Jaenike Sent: Tuesday, October 29, 2002 2:57 PM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] OT 7 I am less munificent about Greenspan's performance than you, I'm afraid. I agree that we need to spend time examining the runup in the late 90s, and to learn from it. Unfortunately, I believe Greenspan played a central role in that runup through a tremendously expansionary monetary policy. Those polices appear to be quite similar in effect to the expansionary policies practiced by the Fed in '24-'27. There was a tremendous increase in the money supply in '97, '98, and '99 in response to SE Asia, Russia, and Y2K, at the very time the market should have been allowed to correct. This liquidity, IMHO, generated extreme malinvestment and the enthusiasm that accompanied that trend. Since 2000, we have seen a tremendous decrease in interest rates, and a loose monetary policy. I believe these policies have led to additional asset inflations, notably in housing, and a levering of corporate and, especially, consumer balance sheets. I also believe we have seen the end of that cycle, along with a peak in refinancing activity. Without those props creating artificial and temporary demand in the consumer sector, I think we will see a correction in the real economy. Of course, the links I included explain these ideas much better than I can here. Perhaps I'm wrong. I certainly hope so, because if I'm not, things will get quite a bit worse before they get better. Given the trend in economic data, and, IMO, the quality of this current rally, which to me seems much more like an oversold bounce than a sustainable run, I suspect I am not. And of course, as traders/investors, these ideas serve as background only. The true tells are all in the market itself. Eric Robert Gammon wrote: What stock market investors think about Alan Greenspan in the short term is very nearly irrelevant to the long term effects of his stewardship and the opinions of the legions of people who don't focus their attention on the stock market. His attention is clearly on what matters in the proper function of his job, the economy. His goal seems clear, avoid exuberance on EITHER extreme. More so than most Fed Chairmen, he has managed this quite well. Granted, this is a cooperative effort, the Fed does not have all of the tools in its grasp to take total responsibility for what happens. Rather than bashing Mr Greenspan, we investors/traders need to examine what happened in the late 90s stock market runup, and determine how to properly respond with our investing/trading strategies when thos conditions reappear. The time periods differ, bu! t there are similar lessons to be learned in lots of markets, real estate for example. There is credible evidence today that suggests we may be near a peak for single family home construction. Robert Gammon Houston, TX - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. _____ Do you Yahoo!? HotJobs - - Search new jobs daily now - ------=_NextPart_000_00E1_01C27F8D.14441E40 Content-Type: text/html; charset="us-ascii" Content-Transfer-Encoding: quoted-printable

Eric,

 

I agree.  Good posts – appreciate it. 

 

Rocky

 

-----Original = Message-----
From: owner-canslim@lists.xmission.com = [mailto:owner-canslim@lists.xmission.com] On Behalf Of Eric Jaenike
Sent: Tuesday, October = 29, 2002 2:57 PM
To: = canslim@lists.xmission.com
Subject: Re: [CANSLIM] OT = 7

 

I am less munificent about Greenspan's performance than you, I'm afraid. I agree that we need to spend time = examining the runup in the late 90s, and to learn from it. Unfortunately, I = believe Greenspan played a central role in that runup through a tremendously = expansionary monetary policy. Those polices appear to be quite similar in effect to = the expansionary policies practiced by the Fed in '24-'27. =

There was a tremendous increase in the money = supply in '97, '98, and '99 in response to SE Asia, Russia, and Y2K, at the very = time the market should have been allowed to correct. This liquidity, IMHO, = generated extreme malinvestment and the enthusiasm that accompanied that trend. = Since 2000, we have seen a tremendous decrease in interest rates, and a loose monetary policy. I believe these policies have led to additional asset inflations, notably in housing, and a levering of corporate and, = especially, consumer balance sheets. I also believe we have seen the end of that = cycle, along with a peak in refinancing activity. Without those props = creating artificial and temporary demand in the consumer sector, I think we will = see a correction in the real economy. Of course, the links I included explain = these ideas much better than I can here.

Perhaps I'm wrong. I certainly hope so, = because if I'm not, things will get quite a bit worse before they get better. Given the = trend in economic data, and, IMO, the quality of this current rally, which to = me seems much more like an oversold bounce than a sustainable run, I = suspect I am not.

And of course, as traders/investors, these = ideas serve as background only. The true tells are all in the market itself. =

Eric

 Robert Gammon <rgammon51@yahoo.com> wrote: =

What stock market investors think about Alan = Greenspan in the
short term is very nearly irrelevant to the long term effects of
his stewardship and the opinions of the legions of people who
don't focus their attention on the stock market. His attention
is clearly on what matters in the proper function of his job, the
economy. His goal seems clear, avoid exuberance on EITHER
extreme. More so than most Fed Chairmen, he has managed this
quite well. Granted, this is a cooperative effort, the Fed does
not have all of the tools in its grasp to take total
responsibility for what happens.

Rather than bashing Mr Greenspan, we investors/traders need to
examine what happened in the late 90s stock market runup, and
determine how to properly respond with our investing/trading
strategies when thos conditions reappear. The time periods
differ, bu! t there are similar lessons to be learned in lots of
markets, real estate for example. There is credible evidence
today that suggests we may be near a peak for single family home
construction.

Robert Gammon
Houston, TX


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- -In the email body, write "subscribe canslim" or
- -"unsubscribe canslim". Do not use quotes in your = email.

 

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- ------=_NextPart_000_00E1_01C27F8D.14441E40-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Tue, 29 Oct 2002 22:33:02 EST From: Spencer48@aol.com Subject: Re: [CANSLIM] Inflation Confined Mike: Just an observation: I would bet that taxes and spending on govt. services is rising higher than the rate of inflation. I would also believe that the most competitive industries with companies that produce commodities (like supermarkets and computers) have less of a rise in their prices. (As the lamented Katherine might remind us: CPI is just the avg. of prices in goods & services that rise and fall. And in an avg. there are items which are above the avg. and items which are below. Since govt. is a monopoly with a built in demand (no matter how poorly it might serve its costumers, if you don't pay for its services you'll end up in jail), using CPI as reflective of the prices that govt. charges for its services is like comparing a shark to the rest of the non-predatious fish in the sea-you can say that they're all fish, but still they are not the same. jans In a message dated 10/29/2002 6:00:19 PM Eastern Standard Time, mike@proactech.com writes: << I didn't mean to say that there was no inflation, just that the rate of inflation is relatively low. According to the BLS (which one could choose to distrust, of course, or argue,validly, that it its not a representative number) the overall increase in the CPI over the last 12 months for all cities was 1.5% while the increase in medical care was 4.6%. Aloha, Mike Gibbons >> - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ End of canslim-digest V2 #3012 ****************************** To unsubscribe to canslim-digest, send an email to "majordomo@xmission.com" with "unsubscribe canslim-digest" in the body of the message. For information on digests or retrieving files and old messages send "help" to the same address. Do not use quotes in your message.