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Archive for Tuesday, January 14, 1992

FINANCIAL VIEW

January 14, 1992

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To the editor:

When the Federal Reserve dropped the interest rates to the lowest rate they have been in recent years, they fired the starting gun to jar the economy loose.

With income rates for investors dropping also, those heretofore satisfied to go along with short-term investments, suddenly found they had some dogs on their hands. Learning that the stock market was awakening from a long sleep, their short-term investments became "trash cash. So, into the market they dashed to realize some of that new vigor.

Naturally, the stock market responded, issues leaping in value. The euphoria of better times spread. Quick food was one of the first to see their cash registers spin; families began eating out. Look what's happened to restaurant stocks. Stores seem to be selling more meat, especially the more expensive cuts.

Like a thermometer responding to the heat, the rapidly rising stock reports have people reading the financial page ahead of the sports section. A once-sleepy stock market is now becoming, Miss America. The board of a certain retail giant met last week to declare its tenth 2-for-1 stock split to occur in June.

It is hoped that new investors will learn the wisdom that has put the old investors on easy street, "buy it and forget it . . . let it lie for a minimum of three years." But those used to getting monthly cash on their short terms, who become disenchanted and sell off quickly, will be the ones who give the market a bad name.

And worse, if enough of them kick over the traces, the market will descend just as quickly, possibly creating another depression.

Emory Scott,

603 W. 27th Ter.

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