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us Stokes: Industry Edge This Week:
A MARKET IN
CRISIS... GREENSPAN STEP DOWN?...7000 DOW? Distinct Possibilities...
Executive escape
JULY 18, 2002
Much to the chagrin of even
the most optimistic observers and players, the market, particularly the
Dow, continues to do its thing, which is to find its true level.
The DJIA
closed Thursday of this week at 8409.49 -- these days about as "bearish"
as Russia -- but no doubt on its way to "new" lows. A quick look at the
rise of the Dow from 3000 in 1990, to 7000 in 1997, to above 11000 in the
fall of 1999 via Dow-Jones indexes
(www.djindexes.com/jsp/avgDecades.jsp?decade=1990#dowdiary)
is an excellent historical
comparative.
In
light of recent revelations and investigations, it really and truly is in
the best interest of the economy to stop the artificial stimulus that has
been part and parcel to market existence for at least the past 5 years.
The extent to which key Wall Street executives encouraged such
stimulus and which resulted in the subsuming of the most basic checks and
balances, have made the alleged excesses of Milken and Boesky seem trivial
by comparison. Presidential calls for bringing such ones to justice are
viewed by many as hollow; afterall, the longest running bull market
required a modification, if not an outright suspension of the SEC regs so
elegantly crafted by Joe Kennedy.
It is
also our expectation that Greenspan may well be "invited" to step down,
but for reasons all but diametrically opposite to the head of the
SEC. The Chairman is about perfect a choice for the position as they
come. And in a perfect world devoid of presumed prerequisite political
machinations, there would be no question as to competency and capability
to stay long term. He has, afterall, presided over one of the longest --
if not the longest -- boom cycles in US history. Prior to the step
down possibility, the market would be well served if he ignores the
political ramifications associated with raising Federal rates by a half to
a full point.
This
is the next necessary step that will accomplish everything everyone wants
the market to do, in addition to reeling in an artificially weak Yen.
The
"irrational exuberance" that prompted Greenspan to "build a hedge against
inflation" by raising rates six years ago in the middle of a boom, has
come full circle in the damage inflicted on our economy by investor
overconfidence.
Right
now, at this moment, he needs to show the same courage and conviction
demonstrated then.
In the
meantime, with no further inappropriate stimulation, the Dow will fall to
within the 7,000-7,500 range, with 7,000 to 7,200 representing the buy, or
sell, point. These numbers will represent as true an indication of market
worth as we've seen over the past half decade. It's as close as the market
will come to setting itself back to zero, and benefit is that any
subsequent increases in level will be largely viewed by investors as
real. The upshot: investor confidence rises.
SHELTER FROM THE
WIND
As
these market gyrations, oh, just call it a plunge, continue, the makers of
Aspirin, Advil, Bufferin and Motrin are no doubt experiencing
unprecedented sales. Well, duh.
There
are better stress management techniques than the above, actually, and we
must say that we found a place that truly represents "shelter from the
wind". No, its not some sprawling resort on the Big Island or a place
only accessible by billionaires with Lear 60s, G5s, BBJs or Avantis.
Rather, it's a quiet place in the Florida Keys whose true beauty is found
underwater.
They
call it the Lookout Lodge (www.lookoutlodge.com)
and if you need to clear your head of swirling NASDAQ, DOW, S&P 500
numbers and the latest moves by Al-Queda, do yourself a favor and visit a
place that's part dive resort, part B&B and part home. Tell them we sent
ya...
Myron D. Stokes
The best SUV in the
world and eMOTION! REPORTS.com SUV of 2003: RANGE ROVER
eMOTION!
REPORTS.com Publisher
Myron
D. Stokes presents Land Rover
NA
Vice-President and General Manager
Steve
McKnight with the site's award
for SUV
of 2003, the first in the world
for the
new Range Rover, at the Chicago
Auto
Show on February 7, 2002. It was
subsequently followed by the BBC's
TOP
GEAR award. Range Rover has since
gone on
to smash sales records in the US,
amid
worldwide accolades and acknowledge-
-ments
of the ER award.
More pieces by Myron Stokes : Industry Analysis 
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