I submit its no different than a Drug addict or Alchoholic that knows the parties over in a couple weeks. Breath taking-- Question--if 7000 was irrational! what is 12,000?

-- d----- (dciinc@aol.com), December 03, 1999

Answers

Stay focused on your preps. The potential for a massive volume reversal is upon us.

Ray

-- Ray (ray@totacc.com), December 03, 1999.

An earlier post indicated that the Fed is flooding the money supply with liquidity right now (in case of Y2K "panic" at ATMs). I suspect a direct relationship.

-- Anonymous999 (Anonymous999@Anonymous999.xxx), December 03, 1999.

Reuters is saying that Merril Lynch is playing the party pooper today by trying to bring some reason into this scenario. (bigcharts.com)

-- TM (mercier7@pdnt.com), December 03, 1999.

Obviously it is only your opinion that it was overvalued at 7000. Apparently, millions of investors DISAGREE with you. At least they are putting their money where their mouth is........

We heard similar nonsense a few weeks ago when you-know-who was rambling about how everyone better buy gold because it was going nowhere but up. It was about $320.00 an ounce at the time........let's see.....what is it today......how many here bought gold on that recommendation and lost I wonder.

Also, the DOW was just below 10K a few weeks ago. Now it's over 11.2K. Sure it may go down however those that sold off a few weeks ago have LOST a lot of money that they would have made if they had not panicked and sold out at that time.

Bottom line is it is all speculation. The old rules may apply, but not necessarily.

So if you didn't buy in when the DOW was at the IRRATIONAL value of 7000, then you haven't taken advantage of the 60% gain since then. Your choice.

-- Craig (craig@ccinet.ab.ca), December 03, 1999.

http://nypostonline.com/business/18993.htm

Link

THE FED IS PARANOID ABOUT Y2K By JOHN CRUDELE

THE Federal Reserve is being driven to distraction by Y2K.

Even as the Central Bank has been publicly tightening monetary conditions through three interest rate hikes this year, it has been quietly pumping money galore just in case the Millennium madness being predicted actually does happen.

Michael Belkin, a Fed expert who writes the Belkin Report, says Alan Greenspan has allowed $70 billion in cash to flood the U.S. monetary system in recent weeks and has created something called a "repo option." These options could leave the monetary system awash in another $426 billion in additional emergency cash in the next few weeks.

"This all adds up to the biggest Fed credit expansion ever. This monetary boost is wildly stimulative for the U.S. equity market in the short term," Belkin says, "but will leave equities painfully vulnerable to a crash once the Y2K-related credit expansion is withdrawn in the new year."

In recent weeks the Fed has allowed the nation's money supply to soar and has liberalized collateral requirements for government securities dealers doing business with the Fed.

Last week alone, the government's M-3 money supply figure rose at an annual growth rate of 12 percent. That's more than double the normal growth and far above what the Fed would generally allow.

But the repo options, which were first sold on Oct. 20, are the thing that could pump more money into the nation's monetary system the quickest.

Financial insitutions that buy these options can convert them quickly to cash in a pinch.

Ironically, this liquidity burst comes at a time when the Fed is pretending to be very stingy. The third rate hike of the year that came a couple of weeks ago was billed as the Central Bank's "get- tough policy."

By the Y2K actions really means that the Fed isn't the Scrooge Wall Street fears but really a very generous Santa. And a Santa who's petrified about the New Year consequences.

What the Fed has been doing could help stocks rise nicely over the short term. As I've already said, there are only a few hurdles that could get in the way of bigger bubbles by year end.

But the Fed's generosity in itself could be a big long-term problem for the financial markets.

The bond market would normally rally if it thought the Fed was being diligent in fighting inflation. And that's precisely the message that the three rate hikes should have conveyed.

But bonds have, instead, been very weak despite the Fed's supposed nastiness and rates have risen beyond where the Fed intended.

And that is leading many to believe that investors worldwide are wise to the Fed's Santa Claus ruse.

That's also why the U.S. dollar has been so weak. And why, traders say, the Fed was forced to rig the bond market last week with massive purchases of all maturities of government securities.

The prognosis? The stock market should have a very easy time between now and year's end -- even easier than I first thought.

But there could be trouble later when word gets around about the Fed's dirty little secret -- so don't go spreading this around.

-- (just@helping.out), December 03, 1999.

The stock market is not driven in the short term by reality but by perception; right now it's totally captivated by an orgy of greed and speculation. In the long run, however, reality always wins out and the reality is that this bubble will burst like all speculative bubbles. Since it's the largest market bubble ever seen, when it blows it's gonna be the mother of market mania blowoffs, followed by the nastiest depression you can possibly imagine. Arrogant blatherskites like Craig will be standing in the soup lines while those who have prudently cashed out of the market will be the source of the new wealth.

-- cody (cody@y2ksurvive.com), December 03, 1999.

Hey Craig, pretty soon we are going to find out if that nonsense about the banks having $1.13 for every $100 on deposit is true. We probably won't get to test all those y2k changes you made, thank God!!

Your Pal, Ray

-- Ray (ray@totacc.com), December 03, 1999.

You all know that if you keep pumping air into a balloon, eventually it's going to pop. The present market has been manipulated, massaged, misreported, and driven to complacency by fed.gov and fed.reserve.

There have to be people in the government, right now, that are aware of this and are cringing everytime there's a greedfest on Wall Street. But don't tell John Q. Investor...

All it would take is one of our "friends" in Asia (IE Japan or Taiwan) or Europe (Germany) to start cashing in T-Bills if they get in a cash crunch. After a critical number of T-Bills have been presented for payment, guess what? There's no more cash supply!

Then the cash that's been hoarded for Y2K fears will be suddenly injected into the economy, inflation and interest rates will skyrocket.

If that happens, the fed.gov's national debt (which we're just paying interest on anyway) DEFAULTS because there will be so much interest due we can't pay it. IOW the economy shuts down, or slows to a 1930 level, or lower.

It's a scenario that could or probably would be a 10.

-- Powder (powder@keg.com), December 03, 1999.

Oops, maybe that was Deano that made all those changes to the Mortgage software, hard to keep track of all you SHILLS!!

Ray

-- Ray (ray@totacc.com), December 03, 1999.

For me, this just confirms that the crash is going to be devastating, even worse than the 30's. If 6000 was irrational exuberance, what do you call 12000 28 days before a known major global computer malfunction?

-- a (a@a.a), December 03, 1999.

Gawd! Paula, Laura and silver ion, their sleek bodies oiled, their furies unleashed, their passions aflame, wrestling in an ORGY of mud seasoned with tomato sauce....

Whoa -- this has nothing to do with the frigging DOW. Guess I'm still recovering from the next thread up.

Paron me....

-- King of Spain (madrid@aol.cum), December 03, 1999.

I am not worried about the DOW, I am REALLY worried about the Nasdaq.

Up nearly 33% in just 6 weeks?.

-- hamster (hamster@mycage.com), December 03, 1999.

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001nPd

Fed's Y2K liquidity measures keep markets calm

-- (M@rket.trends), December 03, 1999.

It's not whether the dow or Nasdaq indexes do well, it's whether YOUR stocks do well. For the novice and uninformed, the Dow IS the market and the NASDAQ IS the market. This is true only if you invest in index funds.

The dow industrial average is a composite of a very few number of stocks (30, I believe), that are blue-chip, top-of-the-line companies that will tend to do well even in a poor economy. The NASDAQ is heavily weighted in technology issues. The truth is that most investors will underperform the market indexes in their own personal portfolio because they are taking cues from the wrong places and constantly chasing stocks with great returns the PREVIOUS year.

The overall market, with the exception of a few critical stocks has been in a silent downturn. This has been masked somewhat by changing the components of the dow (adding Microsnot, dropping two other companies).

I will admit, I guessed wrong and predicted about a 7000 dow by now, but I believe that the chances of making it to Jan 3rd without a major sheeple-induced correction are slim. The media coverage is sliding to the negative side, and people are growing concerned. A large percentage of people, as stated on this forum,are considering selling holdings in order to have cash for the rollover.

BTW Craig, had I stayed invested in the market, I would have LOST money. My stocks have dropped since I sold, contrary to the Dow and Nasdaq. I also believe there will be yet another rally in gold toward year-end. Too many people are starting to ask my opinion about "this Y2K thing".

-- ariZONEa (desert@sw.com), December 03, 1999.

International Flight to Quality!

-- Bill P (porterwn@one.net), December 03, 1999.

A _lot_ of money coming from somewhere.

-- Mitchell Barnes (spanda@inreach.com), December 03, 1999.

According to Reuters:

Stocks Soar on Jobs News,

"Stocks were in orbit at midday on Friday after blasting off on a key jobs report that showed no signs of wage inflation. The rally placed the three major stock indices at or near record levels.

'It is the Goldilocks picture,' said Pierre Ellis, senior economist at Primark Decision Economics. 'There is strong growth without inflation.'

The Dow Jones industrial average rose 265 points, or 2.40 percent, to 11,304, putting the index within striking distance of its record close of 11,326.04 set on Aug. 25. It traded briefly as high as 11,341.

The New York Stock Exchange said it imposed trading curbs at mid- morning when the marquee index soared 210 points.

The Standard & Poor's 500 index, a broader stocks yardstick, jumped 32 points, or 2.31 percent, to 1,441, putting it above its Nov. 18 record close of 1,424.94.

The technology-heavy Nasdaq composite index rocketed 77 points, or 2.23 percent to 3,529 after soaring to another high at Thursday's close.

The broad-based rally was set off by a U.S. Labor Department report that November hourly wages rose by a less-than-expected 0.1 percent, or 2 cents. Economists polled by Reuters had expected a 0.3 percent increase..."

-- (pshannon@inch.com), December 03, 1999.

The current mania in the equity market, is unfortunately, directly tied to y2k. Firstly, as other posters have mentioned, the fed res has been enormously expanding M3 to get ready for the coming liquidity crisis. Secondly, y2k could not come at a worse time with respect to this mania blowoff. Given the current mania, in which the market cap of all internet stocks exceeds $500 billion, when this breaks Jan3rd, the downside is simply unknowable. The rise in the Nasdaq this fall has been parabolic, even on a log scale. The trip down will be truly awesome. Bought puts on the S&P 500 LEAPS yet? Today might be an excellent time to do so. Get revenge on the Polly's: take their $.

-- Les Holladay (holladayl@aol.com), December 03, 1999.

Tulip Mania, South Sea Bubble. Every generation or "age" thinks itself wiser than the "primitives" of the past. Not so. So, human nature being the same, bubbles and blowoffs WILL occur just as they have in the past. 400 years ago (whenever), tulips in Amsterdam, next month or next year, stocks in New York (and elsewhere).

-- A (A@AisA.com), December 03, 1999.

Craig

I realize that you are the investment progosticator par excellence but I believe the reference to 7,000 being irrational was from non other than Al want a few hundred billion Greenspan's "irrational excuberence (sp?)" comment.

Also remember paper profits like paper losses exist only in fantasy land until you sell or the company goes bankrupt.

My take is that this market would reach levels few would have seriously thought possible a few years ago. The DOW was at 12 k before dropping to 10K before riding back up. This is likely distribution until I see confirmation of a breakout from the previous highs. If you look historically the market bounces on tops and bottoms sort of like a ball before the real direction change occurs. Unless you are a day trader the daily moves even extremes mean nothing but noise. By the way I road up from the "irrational point" but now consider discretion the better part of valour. If I miss the first move up, so be it. But the first rule of thumb I use for trading is #1 preserve capital, and #2 see rule #1. Paper profits mean nothing on the downside.

-- squid (Itsdark@down.here), December 03, 1999.

D et al, Amercans have handed over their retirement funds, their savings and their faith to mutual fund managers who now control more money than any group of human beings in history. They are desperate to keep pulling in new buyers who are borrowing against homes and other real estate to buy more shares of the Ponzi con. They are also borrowing against the shares themselves thus throwing more hot money into the ecomony. What cash the market doesn't capture is hemoraging overseas at 24 billion a month in an orgy of importation and consumption. That money is leaving and not coming back. Thus we are exporting our funny money all over the world to distort the other nations' economies. This means the U.S is loosing a third of a trillion dollars of it's wealth a year to foriegners. The dollar will decline, and interest rates will rise alot even without Y2k, which I think will be a near disableing situation. Foriegners will pull out of U.S. debt, leaving us with our cyber money, a weak manufacturing base, a weak defense structure and a bunch of bureaucrats and office workers who only know how to click, drag, and file. We've built a world on silicone (sand) which can wash away very quickly.

-- doktorbob (downsouth@dixie.com), December 03, 1999.