Comstock Partners, Inc.April 20, 2001
THE FED PANICKING
Yesterday CNBC interviewed Charles Minter
An eminently Successful Analyst recently opined, "Rate Cuts will not save the stock market." Yesterday CNBC interviewed Charles Minter, analyst and Portfolio Manager of the Comstock Capital Value Fund, which has enjoyed excellent performance during the present Bear market. Per Mr. Minter, "Fed rate cuts in the past never saved any bear market – and it won't this time." To support his assertion he cites what happened in the Great Crash of 1929 and what is occurring today in Japan. Minter said the US Fed repeatedly slashed rates from 6% down to 1.5% in the Great Crash era. But this action did not prevent the Dow from plunging 89% from its 1929 peak to its 1932 trough. Moreover, the Bank of Japan have cut rates incessantly since its 1989 Nikkei peak. Nonetheless, the Tokyo stock index is off 66% from its all-time high. Furthermore, Japanese rates can no longer be cut as they are now zero.