Forum Archive Index - July 2002

[nickk@quicksilver.net.nz]

Depends which sector you trade at the time!!!!! 

NK 

marketMaria Smith writes: 

> Within the next 6 months war will have been declared against Iraq and this
> will add to the present gloom. Doesn't look good for world markets. 
> 
> Greg Smith 
> 
>  
> 
> -----Original Message-----
> From: Christopher Scott <christopher.scott@clear.net.nz>
> To: 'sharechat@sharechat.co.nz' <sharechat@sharechat.co.nz>
> Date: Wednesday, July 24, 2002 12:21 AM
> Subject: [sharechat] 
> 
> 
>>Firstly a snippet from Allan Greenspan in 1996 when the DOW was under 7000
>>- He warned of "irrational exuberance" in the market. 
>>
>>Big question: Is it still there? 
>>
>>My view: Absolutely !!! 
>>
>>My Reasons: 
>>
>>1. If indexes do reflect the "value" of a market (this is open to debate)
>>then what's the difference between 1996 and now? Not much I feel except
>>perhaps one very, very significant thing - There is serious distrust in all
>>things reported. This distrust has now extended itself to the cornerstone
>>of the markets - the big Life and Mutual insurers. You know the guys who
>>own and manage the majority of stocks in the market and make individual
>>claims like "400 billion dollars of assets under management". The question
>>comes back to valuation - is this real value/worth or is it just on paper? 
>>
>>2. The multiplier effect. When you deposit $1 in the bank, the bank is then
>>able to lend, not just your dollar, but a multiple more based upon the
>>"guess/prediction/bet" that you'll probably not need it for a while. The
>>same can apply to corporations with over inflated share prices - they use
>>the same principle - until the bubble bursts and their share price plummets
>>(if they're lucky, if they're unlucky ? Enron, WorldCom, etc). Now what
>>happens if large number of people have used their shares as asset backing
>>to loans? A serious contraction of the money supply and continuing
>>recession? Central bank response: lower interest rates. It was enough after
>>9/11 but will it be enough now? 
>>
>>3. Was it real growth between 96-2001? Or another way of looking at it is
>>to ask the question: What has really been produced in the Dot Com era that
>>was of real value? Billions of web pages built at highly inflated prices
>>because of the severe shortage of trained secretaries! (No disrespect to
>>secretaries intended it's just that with a couple of days training the vast
>>majority of web sites could be developed and managed by secretaries).
>>Static web pages are little more than brochures and should not be valued
>>much more highly. No - the amount of real value created in the dot com era
>>was actually quite small. Truly useful software takes a considerable time
>>to develop and I'd argue that the entire process has been interrupted
>>(slowed down) by the dot com era. Yea, yea, you can buy internet enabled
>>software everywhere - problem is that it's underlying architecture is
>>routed 7+ years ago and it (the software) doesn't even understand the
>>complex relationships that can be enabled by the internet. In summary the
>>question is: How many companies are valuing (or hiding) out-of-date,
>>non-productive web investments as assets on their balance sheets?  Too many
>>I'd suggest! 
>>
>>4. The NZ Bourse: Is it really as immune as it appears to be? Nope - It's
>>coming here too it's just that investors here are fooled by Telecom's
>>apparent immunity to the forces that are affecting every other telco but
>>Telecom dominates the NZSE40. My view is that Telecom needs to seriously
>>write down its assets related to copper under the ground as it is seriously
>>under threat from the airwaves. There doesn't appear to be pressure to do
>>this. Why not? I'd argue that setting up a competing network based upon
>>wireless technologies could be done very quickly and inexpensively
>>(relative to "assets" that telecom thinks it has in it's copper network).
>>Or phased another way: How much of the $5 billion TNZ reports as assets
>>will need to be written off to reflect it's true value? In Summary: If many
>>other companies are valuing assets like Telecom does, then their asset
>>backing is overstated and they will be forced to right down these assets as
>>Telecom will probably be forced to do. 
>>
>>Enough raving . . . Time will tell where the markets will go and whether my
>>(partial) analysis is correct. 
>>
>>Anyone else got thoughts on where we'll be in 6 months time? 
>>
>>NZ Bourse -  a correction coming? (Thank God we'll have Helen at the helm
>>to deal with it - Bill can believe all he likes but I think he'd probably
>>fall apart ;-) 
>>
>> 
>>
>>
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