Forum Archive Index - April 2000

[ril <ril99_99@yahoo.co.uk>]

As I write the Nasdaq is down around 3.5% and the DOT by 4.5% odd. There
are more and more comments servicing on Websites about over-valuations.
There can't be long to go now before there is a negative step shift in
consciousness.

In my previous post I forgot to mention the credit cycle which is
another volatile component of this sad play. Credit is at an all time
high in America. Because people are almost uniformly stupid they don't
think about the downside of leverage. Most people just do what their
friends and neighbours do.

So with extra credit cards maxed to the hilt, mortgages on the whare and
IWS's on the vehicles they wander blindly down the passage of economic
ruin dragging their children's university educations behind them.

The more I am reading the worse it appears to be.

I'm even wondering whether the bonds I am in are going to be safe.
Corporate bonds have yield blowouts during crashes and drop dramatically
as people seek to get their cash out to bail themselves from their
equity positions.

Will NZ be affected? You're damn right it will. The NZ market is
majority owned by offshore investors. These investors will seek cash in
a crash and also take their money offshore. This will push down the Kiwi
peso (sorry dollar) and have a self-feeding effect. I believe the NZ
market will drop a similar proportion to the US industrials despite
their lower valuations.

The reason is that there will be no buyers in NZ. The general unwashed
will be on the sidelines too scared to move. The NZ institutions are not
the same in influence on the NZ market as foreigners (due to NZers
inability to save). However, perhaps they will start the buying.

The whole thing will provide great opportunities though and a wise
little Kiwi will be preparing itself for this eventuality.

Ta-ra for now.

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