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Isle of Capri Casinos, Inc. Message Board

  • stockdreams stockdreams Aug 14, 1999 11:06 AM Flag

    Casino Group Upsurge!!

    After drifting slowly downward for over three
    months, a group average of ten major hotel/casino stocks
    made a strong move upward on good volume on 8/13.
    Looks like the overall group is coming back in favor.
    Another strong reason to buy/hold ISLE.

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    • When inflation did finally materialize, the Bank
      of Japan pushed up interest rates, giving the false
      impression, Yamaguchi said, that Japan had fallen into the
      most fatal flaw of all: pushing up rates to puncture
      the stock market bubble and not simply to fight
      inflation. "We have never targeted asset prices," Yamaguchi

      Many outsiders disagree, arguing that
      Japanese officials left the clear impression at the time
      that they intended through higher interest rates to
      ease down the stock market because they feared the
      consequences of the market bubble.

      Whatever the case,
      Bernanke and Gertler furnished a happier ending for
      America. Stick to inflation targeting, they say, and if
      there is a stock market bubble, let it burst. Acting
      much more quickly than the Japanese did, the Fed will
      reverse course, lowering interest rates and encouraging
      lending, thus minimizing the damage. The main potential
      damage is from falling prices (deflation) and from the
      unwillingness of frightened lenders to keep lending.

      "If you think that over-reaction is a source of
      panic, confidence is restored if the private sector sees
      that the Fed will react," Gertler said, arguing that
      Greenspan's quick actions after the stock market crash in
      1987 and the Russian default last year demonstrated
      his crisis skills.

      "If people have confidence
      that the Fed will stabilize the economy," Gertler
      said, "that in itself will be a stabilizing force."

      Equally important, American banks are far healthier than
      Japan's in 1990, without the mountain of bad debt,
      chiefly in real estate, that Japan's market crash
      revealed. That in itself will diminish the damage from a
      sharp decline in stocks, Gertler and Bernanke argued.
      And Yamaguchi agreed.

      Still, a nagging worry
      remained. Is there more indebtedness and danger of default
      than the conference presenters acknowledged, perhaps
      among homeowners, hedge funds or other investors in the
      stock market?

      Andrew Crockett, general manager
      of the Bank for International Settlements, raised
      that possibility. "Unpredictable things can happen,"
      he said. "If there is a bubble and it breaks, people
      can turn out to have debts you did not realize were



    • So well known is his face that several of the
      tourists who shared the hotel with the conference
      delegates got as big a kick out of sighting Greenspan in
      the lobby as they did sighting moose from the hotel's
      huge back veranda.

      "There is an increasing
      need to integrate into our macro models more complete
      descriptions of the responses of households and businesses to
      risk," Greenspan said in a speech on Friday, referring
      to the risks people take in buying stocks and real
      estate when prices are rising.

      Stock prices in
      particular have become an increasingly significant subject
      of discussion at the Fed's periodic, closed-door
      policy meetings, where interest rates are set. "As time
      goes on," said Edward W. Kelley Jr., a Fed governor,
      "different parts of the economy have a greater impact than
      others. It was oil in the 70's, the very high dollar in
      the 80's, and there is little question that in
      today's world, the stock market is a very important
      component of the overall economy."

      What role should
      the stock market play in shaping central bank
      policies? According to Bernanke and Gertler, the Fed quite
      correctly sets a flexible inflation target, an average to
      be achieved that now appears to be roughly 2
      percent. Indeed, that is close to the actual annual rise
      in the Consumer Price Index these days. When
      inflation drifts above this level, or seems to be in the
      process of doing so, the Fed, in line with flexible
      inflation fighting, generally pushes up rates to try to
      slow the economy. And when economic conditions change
      in ways that suggest the inflation rate will fall
      below the target, rates are usually pushed down to
      stimulate borrowing and spending.

      Always the output
      of goods and services is kept in mind: if the demand
      exceeds the potential supply, then rates go up, and if
      the opposite occurs, they go down.

      prices themselves, in this approach, should never be a
      target of interest rate policy. And in the Fed's
      deliberations, Bernanke and Gertler concluded, inflation has
      been the target, a point Greenspan also made in his
      speech here. Stock prices have been dealt with only as
      one component of inflation -- along with rising
      wages, shifting oil prices and the changing value of the
      dollaramong others.

      Rising stock prices can feed
      through to inflation by making people feel wealthier, and
      companies, too. They spend or invest the new wealth or
      borrow against it and spend the borrowings. Demand rises
      and, if it exceeds the capability of the economy to
      deliver more goods and services, eventually the inflation
      rate should rise, too.

      But are stock prices
      too high? They have risen, on average, 25 percent a
      year for five years, an unprecedented run. Or has the
      United States entered a new era of greater efficiency
      and profitability that justifies the higher prices?

      Put another way, is the spending that emanates from
      rising stock prices excessive and inflationary? A number
      of the people here said so off the record, outside
      the conference room. Greenspan and his colleagues,
      however, insist that they do not know. And in that
      Hamlet-like failure to decide may lie the makings of a
      painful mistake: namely the Fed's failure to raise
      interest rates sufficiently to counteract the inflationary
      pressures coming from overvalued stocks, but not yet
      evident in the inflation numbers.

      Japan fell into
      this mistake, Yamaguchi said. "The C.P.I. stayed close
      to zero for three years through 1988, while real
      growth accelerated to 5 percent per year from less than
      4 percent in the early 1980's," he said. The
      impression grew that interest rates, in the absence of
      visible inflation, would stay low. And with Japanese
      interest rates low, the vision of healthy economic growth
      stretching endlessly into the future -- a vision popular in
      America today -- kept stock and real estate prices

      "The lag between rapid growth and the
      eventual rise in inflation happened to be longer,"
      Yamaguchi said.

    • Stock Market Alone Won't Force the Fed's

      ACKSON HOLE, Wyo. -- Like the
      narrator in a Greek drama, Yutaka Yamaguchi, deputy
      governor of Japan's central bank, took the lectern here
      and sadly described how the booming Japanese economy
      in the late 1980's came to tragedy. His description
      of Japan at its peak sounded eerily parallel to
      America in today's still evolving boom.

      question haunts us to this day," Yamaguchi said. Would
      different policies have prevented the terrible crash of
      Japan's stock market and real estate prices and the
      decadelong recession that has followed? "With hindsight," he
      said, "such excellent performance was unsustainable."

      Alan Greenspan, the chairman of the Federal Reserve,
      listened from the front row of long, narrow tables in the
      hotel conference room. Gene Sperling, President
      Clinton's chief assistant for economic policy, sat in the
      next row, just behind Greenspan. And most of the Fed's
      top policy makers -- the men and women with their
      hands on the crucial levers of the economy that control
      short-term interest rates -- were scattered through the
      crowded hall, with its invitation-only audience of
      prominent economists and high-level foreign officials.

      The Federal Reserve's annual two-day gathering at
      Jackson Lake Lodge, across a vast green meadow and
      sparkling lake from the breathtaking Tetons range, has
      evolved from an informal get-together organized by the
      Federal Reserve Bank of Kansas City as a late August
      escape for central bankers into a high-powered forum for
      debating the issues that shape economies around the world.
      The big topic this year was the ever-rising American
      stock market. And almost as if they were staging a
      play, the Fed officials chose to act out, through
      research papers and speeches, how they were coping with
      its hard-to-control impact.

      Yamaguchi played
      the heavy. Reviewing all that the Bank of Japan had
      done and failed to do, he left open the possibility
      that the Fed might also make mistakes, falling victim
      to roughly the same forces that brought down Japan
      in 1990.

      "If there is a bubble in the
      American stock market," he said in an interview, "the
      outcome is difficult to predict when it collapses."

      But if Yamaguchi's narration was foreboding, many of
      the Americans here said the last act of their own
      drama would end differently. The Japanese lesson has
      been well learned, they say. Further, the financial
      system in the United States, after its own wrenching
      changes early this decade, does not suffer from the debt
      problems that were Japan's real undoing after its stock
      market bubble burst. American real estate is nowhere
      near as inflated as Japanese property in the late 80's
      when, on the eve of the collapse, the land under
      Tokyo's Imperial Palace was supposedly worth more than
      all of California.

      And if Wall Street
      crashes? Well, the Fed stands ready to minimize the
      damage, particularly with Greenspan still at the helm.
      After all, in the October 1987 market debacle, his
      skills in this department were aptly demonstrated.

      "In all the discussion about crashes, we forget that
      the Greenspan Fed will react," said Mark Gertler, a
      New York University economist and the co-author, with
      Ben Bernanke of Princeton, of a new research paper
      that outlines how a central bank should proceed,
      particularly in the presence of very high stock prices. The
      Fed commissioned the study after learning that the
      research by Gertler and Bernanke reflected the thinking of
      Fed policy makers.

      Greenspan carried his own
      suitcase when he came to these annual conferences in his
      early days as Fed chairman. Now, he moves about with an
      entourage of Secret Service agents. He has become a
      bigger-than-life figure in American public life, getting
      considerable credit for the nation's prosperity in recent
      years but likely to be the target of considerable blame
      if things go wrong.

    • Reminiscences Of A Stock Operator -

      Bulls Eye

      Nowhere does history indulge in repetitions so often or
      so uniformly as in Wall Street. When you read
      contemporary accounts of booms or panics, the only thing that
      strikes you most forcibly is how little either stock
      speculation or stock speculators differ from yesterday. The
      game does not change, and neither does human nature.

      -Reminiscences Of A Stock Operator, published in 1923
      Jesse Livermore under the pseudonym, Edwin



    • Some money from some redemptions is going into
      other investments, including individual stocks, as
      investors take advantage of low commissions available
      through on-line trading. In fact, the longstanding trend
      of investors selling shares of individual stocks
      slowed in the first quarter after having risen sharply
      for many years, according to data from the Federal

      Matsanoff, for example, the commercial
      real estate broker from Columbus, has transferred some
      money from funds to individual stocks in hopes of
      getting better returns. The fund he sold last month was
      performing well. "But my individual stocks were performing
      better," he said. "So when I decided which one I should
      pick in order to write a check for the truck, I
      thought my mutual fund was the way to go."

      He is
      quick to say that he is not part of the on-line
      revolution, preferring the advice of his investment adviser,
      Donald L. Sazdanoff, of Sovereign Asset Management in
      Lexington, Ohio. "I see people getting killed" through
      Internet trading, he said. "I'd rather get the right
      advice from a professional than try to make a decision
      based on limited time for research."

      consumer debt levels and personal bankruptcies remain
      high, many consumers have paid down debt recently or
      chosen to pay for new purchases with cash rather than
      credit -- a trend also attributed in part to the strong
      stock market. In a report this month, Moody's Investors
      Service said that in the second quarter consumers paid
      off the highest percentage of their credit card debt
      in a decade and that credit card delinquency rates
      fell in June to their lowest monthly level since April

      But even as the rising stock market has
      helped propel the economy and strengthen the financial
      condition of the typical American household, "it's a
      two-edged sword," said David M. Jones, chief economist of
      Aubrey G. Lanston & Company, a New York bond dealer.

      "If the stock market gets out of control, then
      there's a danger that spending will be excessive," Jones
      said. "And that will put undue pressure on the labor
      market and kick off cost-and-price pressures, forcing
      the Fed to tighten more than it might,"

      could be a rude awakening," he added, "for the stock
      market, and consumers' balance sheets."



    • The growing importance of investment gains means
      that central bankers "no longer have the luxury to
      look primarily to the flow of goods and services, as
      conventionally estimated, when evaluating the macroeconomic
      environment," Greenspan said. In other words, central bankers
      must increasingly wrestle with the value of consumers'
      stock portfolios, homes and personal debts when setting
      interest rates.

      Though economists agree that
      investment gains play a large role in consumer spending,
      they still differ on how significant the effect. A
      study last month by two officials at the Federal
      Reserve Bank of New York, for example, concluded that
      stock market fluctuations affect current spending but
      "changes in wealth in this quarter do not portend
      significant changes in consumption one or more quarters

      The decision by consumers to keep
      spending based on their increased asset values is a
      fragile one. The high rate of mutual-fund withdrawals
      suggests that consumers have been selling investments at a
      quick pace to maintain and upgrade their standard of
      living. Whether those sales continue, especially if the
      market swoons, could have big implications for the

      A. Michael Lipper, chairman of the fund
      research company Lipper Inc. in Summit, N.J., attributes
      some of the selling to the aging population. "A fair
      amount is due to people achieving their retirement" and
      resetting their financial goals, he said. "People are
      getting older."

      But he also says that many others
      think the market may be overvalued. "They are reducing
      their equity commitment," Lipper said.

      The high
      rate of fund redemptions unnerves John J. Brennan,
      chief executive of the Vanguard Group, who says he
      cannot figure why redemption rates would be higher now
      than during the market's nearly 20 percent selloff a
      year ago. "That's the mysterious issue now," he said.
      "People who hung in last year are paring back and taking
      some risk off the table."

      Indeed, investor
      optimism about the stock market has dropped sharply,
      according to a Paine Webber Inc. poll of small investors.
      Optimism is close to the lowest level in three years, with
      55 percent of the people surveyed optimistic and 18
      percent pessimistic, according to the poll, which was
      conducted early this month by the Gallup Organization. The
      sample included 1,004 people with at least $10,000 each
      in assets to invest. When asked what they thought
      the market would do in the next three months, 28
      percent predicted it would rise and 23 percent said it
      would fall.

      To be sure, a lot more money is
      still flowing into stock mutual funds than out, buoyed
      by stable streams of contributions to 401 (k),
      individual retirement accounts and other such plans, which
      workers continue to feed each month to get tax breaks.
      After a rocky period following the market's drop a year
      ago, net fund sales are strong, if somewhat below the
      pace of the last two years. By this measure --
      investor purchases minus redemptions -- investors poured
      $61.3 billion into stock funds in the second quarter
      and an additional $12.3 billion last month, according
      to the Investment Company Institute.

      As the
      popularity of mutual fund "supermarkets" like that offered
      by Charles Schwab & Company has grown, some
      redemptions have gone into other mutual funds, though
      economists say they doubt this accounts for much of the rise
      in recent months. "Supermarkets have been around
      awhile" and can account for only a small part of the
      sudden increase in stock fund redemptions, said John
      Rea, the chief economist of the Investment Company
      Institute. Moreover, investor switching within the same fund
      families has stayed at about the same pace, as a
      percentage of total fund assets, for a half-dozen years, by
      the trade group's tally.

    • August 31, 1999 MARKET PLACE
      Short-Selling by
      Day Traders Is Investigated by Government

      ately, a lot of investors have
      found that one of the best things about mutual funds is
      selling them.

      Don Matsanoff, 37, a commercial
      real estate broker in Columbus, Ohio, cashed out of a
      Dreyfus mutual fund in July and spent $24,000 of the
      proceeds on a sport utility vehicle. After enjoying strong
      returns for much of the 90's, he said, it was time to buy
      some things he had put off while he let his profits

      Most of his money remains in the market,
      he said, but he would rather take a profit on some
      of it "and use it for something, than have it sit
      there and watch it go up and down."

      Columbus real estate broker, Wayne Harer, 47, recently
      sold about $150,000 in fund shares to pay for home
      remodeling. He could have obtained a home-equity or other
      loan, but with three children and college expenses
      looming, "I wanted to start whittling down that debt," he

      "I just said, 'I'll take this amount off
      the table,' " Harer said.

      Amid the market's
      record highs and volatile moves, many investors have
      decided to sell some of their funds and use the profit to
      remodel the bathroom, buy a new washing machine, take
      that expensive vacation or splurge in some way.

      In fact, investors are cashing out stock mutual fund
      shares at the highest rate in almost a dozen years.
      Though more money is still flowing into funds than is
      being taken out, the pace at which people have been
      selling fund shares has been growing faster than the rate
      of purchases.

      This selling helps to explain
      the surge in consumer spending on big-ticket items.
      Higher interest rates usually muzzle spending, but not
      this year. Home sales have soared, car sales are on
      pace to set a record, and retail sales have been very
      strong. By the method that the Federal Government
      measures things, consumers are spending more than they

      Investors typically sell 13 to 17 percent
      of their stock mutual fund shares in any given year.
      But that rate has grown substantially, and in July
      investors redeemed shares from fund companies at an annual
      rate of 21.8 percent, according to figures released
      yesterday by the Investment Company Institute, a trade
      group based in Washington. That is the highest level
      since December 1987, when investors were still pulling
      money out in the aftermath of the October crash.

      Of course, the fund redemptions are not all being
      spent on consumer goods. Some proceeds are being
      reinvested into other funds, or perhaps into Internet stocks
      or other market darlings. But economists and
      fund-company executives say those cannot account for the
      strong pace of redemptions lately.

      economists say that the giant profits earned in stock
      portfolios this decade have led individuals to spend far
      more than they otherwise would, thus helping keep the
      economy -- and corporate profits -- perking along. They
      break the "wealth effect" down like this: For every
      $100 increase in net worth, a consumer will spend at
      least an additional $3 or $4 a year.

      With the
      recent increases in stock prices, that has translated
      into big spending gains. Total personal financial
      assets were $27.6 trillion as of March, nearly double
      the level at the end of 1992, according to the
      Federal Reserve. And that does not count gains in home
      prices. Borrowings against increased home values
      "influence consumer outlays beyond the effects of gains from
      financial assets," Alan Greenspan, the chairman of the
      Federal Reserve, said in a speech Friday, adding that
      run-ups in the prices of homes are at least partly
      related to increases in stock prices.

    • WHERE is the Dowguru today?



    • Orders from the top.


    • The group sold more than 250,000 shares on August
      2, 1999. And our estimates, based on a friendly
      source at Legg Mason, are considerably more at that
      time. The total could exceed a



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