Forum Archive Index - September 2001

["geoff_julie" <gk_jawalker@paradise.net.nz>]

David

 

excellent post, in similar vain to mine on Friday (titled:  Future predications).

 

I too believe we are in for some bad corporate news from the US for the next 6-12 months.  I follow the market closely and am amazed at the constant carping by the so called experts that a recovery is just around the corner.  The "experts" on CNBC are shocking at talking the markets up.  Sure, they have a self interest and it's their job but it pays to be wary (i.e. DF Mainland ADV prediction of $6 a few months ago, give me a break!!).  I still fondly remember last year when the worldwide Telco's were spending billions of dollars on 3g all the experts agreed it was a sure winner - you had to be in to reap the pot of gold it promised.  Any idiot with 2nd form economics / maths would have worked out they paid per customer numbers were simply garbage (from memory every citizen in Germany would have to spend several hundred dollars per year in rental to break even, this excluded set up costs and a reasonable profit).  Of course the inevitable happened and the smart investors dumped telcos worldwide due to debt levels and little growth left in the cell phone market.  Even Vodafone are struggling to introduce 3g.

 

Anyway, the point of my email is to highlight the fact that sentiment and company profits drive a market.  If either one (I believe both are missing at the moment and will be for several more months) is missing, the market will retreat.  The cure, a few major companies go broke (especially in Japan and US), bankruptcies go through the roof, and interest rates drop substantially lower than they currently are.  Slowly but surely the market finds equilibrium and moves up again.

 

Still, sure is fun picking the good ones from the bad ones

 

Regards Geoff

 

ps    wouldn't touch any stocks in NZ's top 10.  Forestry a fizzier, SKY a complete dud (11 years without a profit and no accurate prediction of when they will produce one [sounds like a US dot com don't it, how long before the banks and shareholders pull the plug?]), INL overpriced, AIA in for some lean times, TEL & WHS in danger of an Ozzy backlash over the disgraceful Ansett performance by the AIR board.