Stock Alert : LUSENET : TimeBomb 2000 (Y2000) : One Thread

I just finished listening to Dr. Edward Yardeni's "Weekly Audio Update" for September 27.

This is a rough quote from that briefing (Yardeni speaking approximately 9:30 into the discussion):

"While I travel the country speaking with fund managers, although it is apparent that there is virtually no concern about y2k, many fund managers, in fact some of the very biggest, have told me that they plan to entirely cease trading during the last 2 weeks, or perhaps the last 4 weeks of December. What that means is that there may be very little liquidity. So whatever stocks you own at the end of November you better like a lot."

Me speaking: It takes buying to move stocks up, but they can go down on their own.

I have been wondering just when this market would begin to show a 'y2k effect'. Perhaps I have my answer.

Let's see, we have the most overvalued market the world has ever known, the largest imbalance of trade the world has ever known, the greatest level of consumer debt the world has ever known, the broadest participation in the market the world has ever known (hence the greatest assurance that, if panic were to begin, it would be horrific and unrelenting), inflation heating up and interest rates moving up, y2k worries 'niggling' at all those sheeple (part of their December preps = buy 10 cans of ravioli and sell all my stocks?), and now we find out that many of the largest fund managers plan to leave the market in December (not selling, perhaps, just not buying).

What do you think will happen?

-- TrustHim (, October 11, 1999


The timing of the Crash of '99 will surprise almost everyone.

-- Randolph (, October 12, 1999.

I think they're going to stop conducting business to hide out in stocked cabins "just in case" no differently than a number of others. The Russians are arriving just into December for the ole nuclear monitoring. What could they say, "Skippity doodah, skippity day, I've got SPAM and it maketh my day?"

-- Paula (, October 12, 1999.

Market Capitalization of 120 billion (give or take) Market Cap of All Gold Mines In the World: 50 billion

The TRUTH is too incredible to behold, you have ears but cannot hear, you have eyes but cannot see.

-- hunchback (, October 12, 1999.

I meant all gold mines COMBINED = 50 billion.

The mis-valuation staggers the mind.

-- quasimod (, October 12, 1999.

There you have it. Jesus. I knew there would be problems, but damn. The institutional players will simply back away from the tables mexican standoff style. What a FUBAR. Bet old Alan is shitting his rather expensive silk britches at the thought of this one.

It doesn't matter how wide he opens the discount window, if no one want's to play at the tables and everyone decides to pass. Something tells me however that this may really prove nettlesome for some of the sheeple who've bot into the 3 day storm prophecy. I can hear them now....."but preacher dan told me that wonderful war of the worlds story.....does this mean that he lied to me?"

It's gonna be kinda hard to hold off a story like this one, dontcha think? Poor Alan.......He made all those nice plans, and special k loan provisions hung with care....all to be blown down by a bunch of pimply faced fund jockeys who are saying "screw it man, I'm out, i'm holding all my chips where they are."

Imagine the silence as that last chip bounces on the card table and all the players begin to eyeball the cashiers window like floor traders eyeballing Maria Bartiromo.

Imagine the look on the sheeple when they realize global financial markets are so scared, they've stopped freaking trading for god's sake!

-- Gordon (, October 12, 1999.

It's the fund managers who are the key as to whether or when a Y2K effect will hit the stock market. I could see them halting any action in their trading after December 1 or December 15, on the basis that they don't want a problem in losing hardcopies of transactions that perhaps otherwise might not be available for documentation if trades were conducted close to rollover. IF this is so, then it means that they have NO confidence in the financial computer trading system being compliant. They don't want the risk of losing documentation. This would be a harbinger of market compliance problems to come perhaps.

Now, if they had no fear of this, then I'd expect them to be trading up through til nearly Christmas. Normally most (but not all) fund managers quit buying after mid December anyway except for certain special situations that might arise. Volumes are usually down significantly anyway as the holidays draw close. Between Christmas and New Year's is always a slow time for ALL markets, not just stocks.

If the fund managers do stop on Nov 30, then it could have a downward impact on prices...but there will still be trading going on and I doubt that all fund managers will quit. Enough will continue trading that I doubt that the absence of those who drop out will signifi- cantly effect the DJIA. I suspect enough will continue to trade out of sheer ego unless their portfolio is considered too perfect to touch. Most always look for that extra point or two that might boost them up in the annual ratings race of top picker of the year.

Certainly bears worth watching though.

-- Dick Moody (, October 12, 1999.

g gecko wrote

"There you have it. Jesus."

Yes! He is the One you are to trust!

-- TrustHim (, October 12, 1999.

Uhm,,,,I was referring to Jesus the bowler with the purple outfit in The Big Lebowski.

Is he the ONE to trust in?

-- Gordon (, October 12, 1999.

No, not the bowler.

That aside, the fact remains that there are a HUGE number of people, I believe, who will be 'prepping' in December. I believe that most of these folks will also be 'taking some money off the table' y'know, 'just in case'.

The surveys consistently show that about 30% of Americans plan to withdraw 'some' cash for y2k. How many have actually done so? I would guess it's less than 1%. I would also guess that about 1% have done their y2k stock liquidation. Obviously, these are totally wild guesses.

But consider, if 30% will withdraw FEDERALLY INSURED funds; what % will withdraw from the market?

It's insane to think that all these folks plan on getting out in December - as though no one else is thinking this. But it's just as insane that the big players plan to sit tight in December.

Add to this mix one or more high-profile y2k failures, either here or abroad, and the shuffle toward the exit becomes a stampede. In one nanosecond the fund managers go from non-participants to aggressive sellers. All those 'common folks' who have the majority of their retirement funds tied up in the market, the ones who have come to think of themselves as quite clever as they count chips that are still in play, the ones who claim they are long-term investors and that if the market ever crashes they will simply buy more - WILL PANIC AND STAMPEDE for the exits.

December should be quite interesting - if there has not been a massive wipeout before that month begins.

-- TrustHim (, October 12, 1999.

The cumulative Big Board Advance Decline line peaked on 4/3/98. Since then, most stocks have spent more time going down than up in spite of the fact that the broad averages are much higher today. Interest rates are rising at both the long and short ends. The 90- day T Bill rate is higher than it was one year ago. The S&P 500 is trading at 32 times current earnings and bull markets often peak at PE's in the 20-25 range. All of these are signs of the approaching end of a bull market, and none of these factors have anything to do with Y2K. I think a bear market is imminent even if Y2K turns out to be a dud. CDC may be the excuse for a downturn but not the cause, although it could make the bear more severe.

Much of the talk on these threads is of a crash, but not all bear markets are crash events. The current generation of investors has only seen bear markets that were, in fact, crashes, but the older hands remember those long, chinese-torture downturns that last 1-2 years. We could easily be facing a 1973-74 scenario where the market sells off 50% over 18-20 months. Interestingly, a 50% drop would bring PE Ratios back into the range of their historic norms if earnings remain level. If earnings fall, the drop could be much larger. The PE Ratio bottomed at about 6 in 1974, and that suggests a possible S&P low at around 250 assuming level earnings, or a drop of almost 85% from the highs. This could get interesting.

-- mike (, October 12, 1999.

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