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The Rate Debate

Readers weigh in with thoughts and insights.
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Raising the Roof on the Rate Debate

James Padinha

: In response to your column

Three Reasons the Fed Will Lean Toward Tightening, I agree with your analysis, although I wonder if the


is able to rely on its secret weapon: the market's own rapid reaction to such news and its current impact in bond and equity markets. It's like an invisible wand of influence.

I agree that the Fed's bias is definitely toward tightening.

Lawrence Meyer's

comments about labor rates would clearly show where he stands. But I get a sense from something


was reported to have said, that sometimes it appears as if the markets react and do the Fed's work for it.

I would think the chairman would like the Fed to announce, as strongly as possible, that it really has a bias toward tightening. Instead, the Fed will sit back, watch the markets react and then hold that first, big, important bullet back until it gets one more piece of confirming data. The Fed would hate to appear to be precipitous.

From my armchair perspective, it rightly or wrongly carries some sense of responsibility for "global monetary" policy (yes, I know it's an oxymoron, but it's the influence perspective I'm talking about).

As such, Greenspan and troop talk loudly and hold the big stick back until the next confirmation to beat it -- meanwhile letting the markets sort things out.

-- Mike Hirl

(received 5/17)

James Padinha

: Here's the bottom line. If the Fed

raises rates, it puts millions, not thousands, who currently draw unemployment on welfare.

Businesses pass the higher cost of goods and services on to the consumer whenever possible. What do you say to the people who build cars, construct houses and make major appliances? Gee, I'm sorry, I never thought of that?

If the Fed raises rates, all U.S. senators, representatives and government employees should accept a 50% pay cut!

I heard this when

Jimmy Carter

was president! It didn't work then and it certainly won't work now.

-- Minard Monteiro

(received 5/17)

Reasons Why the Dogs May Dive

Alison Moore

: I enjoyed your article

Dogs of the Dow Having Their Day. The fund I co-manage, the

Strong Dow 30 Value

fund, uses a value approach to choose among the


stocks. While dividend yield is one of our criteria, we feel other criteria can add value to the process. We believe yield, while still important, has lost some of its luster as a reflection of value in recent years since companies are more apt to buy back stock, etc. Thus, dividend policies have changed dramatically in recent years, which may be one reason for the lackluster performance of the Dogs strategy in the past few years.

-- Chuck Carlson/CFA Co-Portfolio Manager, Strong Dow 30 Value Fund

(received 5/11)

The Net Turns Whispers to a Scream

Eric Moskowitz

: In response to your story

Wall Street Is Whispering on Gossip Street, USA, you wrote that this trend "doesn't bode well for anyone." I'm not so sure. It's the wild West right now, for sure, but over time things will settle into a new pattern. I imagine the information will be more reputable and credible.

I think it's just another case of the Net taking out the middleman. The traditional Wall Street method of disseminating rumors -- er, sorry, news and analysis -- is being taken apart. There will be lots of flakes, lots of poor service and so on until things settle down.

Right now, we are in various stages of denial, outrage and resignation. But at some point, you'll see the first consultants preaching to companies that they have to manage the buzz. Suing isn't going to be part of that; you can't nail jelly to the wall. But the corporations will eventually have to have active response teams that wade into the rumor mill to put out the corporate position.

-- Jim Goodwin

(received 5/17)

Eric Moskowitz

: Your

message board article was a good one, but one of the spins was off. The fact that these managers monitor the boards indicates how little real work they do. IR management has severely cut back access to public company information. On the whole, Street analysts do no research. The major fund managers do next to no work, instead relying on the Street analysts.

Maybe the boards will become the forum for controversial info and opinions? I run an investment partnership and, like most bottom-up investors, I spend a lot of time digging through companies. If I'm listening to Street analysts, I've got a problem.

Every couple of days, I check some of the better boards on my stocks because I've found it worth the time. As much as the boards are full of scary inexperience, cheerleading and blatant touting, they seem to be the only place where unabridged info can be disseminated. I use "unabridged" because as you know, most of the content is mindless. However, I think they have added a whole new layer of complexity and feedback to the business. The information is carnal or near-carnal knowledge.

-- Carter Dunlap/Dunlap Equity Management

(received 5/17)

Baby Bells Keep Crawling

James Cramer

: About your column

Call Off the Horses, I appreciate your pointing out how the Baby Bells are archaic and slow. They are, however, a formidable roadblock to the 21st century. They own the wire and the ground and the poles -- their only real assets. And they aren't going to let anyone wrest that monopoly from them.

They could have offered voice video on demand, switched 10mbs to the house, all over their existing infrastructure. But why do it? It's easier to go to court and prevent competition. And the feds go after


(MSFT) - Get Free Report


I hope I live long enough to tell

Bell Atlantic


that I am no longer interested in any of its products and would it please immediately remove all its gear from my property.

-- John Baycich

(received 5/17)

James Cramer

: About your

column regarding how the Bell operating companies blew it, I just had to send a note to say you are right on!

As a director of voice and data services for a large health care delivery system, I have worked with the RBOCs for years and seen exactly the things you describe. When are they ever going to learn that the old status quo isn't going to take them into the next century? I guess the answer is, they never will!

-- Janet Ley

(received 5/17)

The Net's Not Ready for Real Estate Yet

James Cramer

: In response to your column

Relocating Real Estate to the Net, I agree with you. You and your wife have better things to do than shop for the cheapest mortgage, title insurance policy, lawyer, homeowners' policy, etc. That's why you need the services of an experienced mortgage officer. I make a living ferreting out this information.

Home-buying is emotional for many people. You do it a few times in your life, and for most it's the paramount consumer decision. The contract mortgage commitment, rate lock and closing dates are all time-sensitive. Communication between consumer and mortgage officer is crucial.

To be sure, I'm no Luddite. The Internet has changed my life. I've saved thousands in commissions since being online. For a percentage of customers who are refinancing, not buying, the Net probably represents the most efficient way to apply for a loan. However, for people with complex financial histories, or consumers who need help deciphering the numerous programs available, a loan officer is a benefit and not just another variable cost.

-- Dan Calarco

(received 5/13)

James Cramer

: The

real estate headache is from the laws surrounding home and land purchase: escrow, title, property tax, inspections and consumer protection laws. State and local governments will have to simplify this stuff. The Web can't change this process.

Everyone who's ever been through the hell of buying a house knows exactly how you feel. Anyone who figures out some way to cut any significant amount of hassle from this process is going to be very rich. However, I'm afraid that there is so much governmental involvement in every phase of it that there is little chance of things getting better anytime soon.

-- Sid Wade

(received 5/13)

Unavailable Oracle

Elizabeth Roy

: In response to your article

Bonds Leap on Friendly Data and Whispers About Buffett, we have cell phones, hard-wired phones, wireless faxes. We have battery-powered megaphones, satellite transmission of photos, voice, streaming TV and data. We have in-flight cell phones, mental telepathy, carrier pigeons, global positioning and smoke signals. "Mr. Buffett is traveling and can't be reached." I want to go short the means by which he can't be reached.

-- Ralph L. Seifer

(received 5/13)

Reviews of Rubin

James Padinha

: About your

Robert Rubin


Good Riddance, I agree. Boyish Diffidence may have been a grand trader, and may well be a fine fellow, but

Alexander Hamilton

he is not. He was not even

Don Regan

in this writer's opinion. Competent, sure. But Boyish Diffidence at heart supports large, intrusive government.

And here's to the cool, entrepreneurial people of this country who not only survive, but prosper in spite of the self-congratulating kleptocracy in Washington.

-- Chris Buskirk

(received 5/12)

James Padinha

: Regarding your column

Good Riddance, very cute. Only someone with little imagination and tunnel vision would write this ridiculous column regarding

Robert Rubin


Success doesn't happen in a vacuum, and every member of this nation's financial team played a part in it. I notice you were not on the roster.

-- Ingres Admin

(received 5/12)

James Padinha

, sorry to disagree, but I remember the


years and the mounting national debt! I think Robert Rubin is the best


secretary in my lifetime, and I was born in 1937!


explanation for the current market condition sounds like the bang, bang theory. All these fortuitous circumstances happening all at once with a bang and creating a utopian economy -- what a laugh!

-- Kate Rose

(received 5/12)

Russia's Ready to Rumble

Kim Iskyan

: In response to your piece

Primakov Gets the Boot, I wonder what evidence you have seen of

President Boris Yeltsin's

renewed health. The most recent public appearance, which was later described as "an official event" with unofficial comments by the president, would clearly indicate that Yeltsin is not well.

I would agree that Yeltsin is courting a confrontation with the


with the firing of

Yevgeny Primakov

. The question is what good will this do? Maybe he wants to be

Bill Clinton

and face down an impeachment proceeding, but his chances of winning were much greater with Primakov.

Certainly, I cannot imagine why anyone would want to have money floating in a market dependent on Boris Yeltsin's whim at the moment.

-- Alec Guroff

(received 5/12)

Different Strokes for Different Folks

Gary B. Smith

: In response to your column

Gary Takes On the Fundamentalists, much of what you offer is even starting to make sense after all these months of reading. Hey, technical analysis seems to be both science and art. I am starting to get the science, but the art comes harder.

My hats off to you for your response to

Mr. Brunn

. Without acid, you took Brunn's seemingly sensible logic and made it clear that there are two ways of viewing the market. I like that. Rather than bury him, which would have served no one, you sparred until knocking your points home. Neat! I applaud you for taking the time. I thank you for staying away from cheap shots to make your case.

-- Ralph Aceti.

(received 5/12)

Kudos, Gary! Different

trading styles work for different people. In lieu of psychic abilities to know what to hold, trading is actually more conservative (of capital) to me. I didn't start to make real money investing until I went to a trading style. Buying and holding held me captive when I was wrong.

-- Monica Huselton

(received 5/11)

Raising the Roof on Convertible Bonds

Gregg Wirth

: About your story

Convertible Bonds Gain Following as Newest IPO-Entry Technique, this idea of convertible bonds is essentially the same thing that venture capitalists do in structuring deals with entrepreneurs. It guarantees venture capitalists a return ahead of entrepreneurs, because the entrepreneurs are required to hold only common stock in their companies. The bonds, or convertible preferred, are exchanged for common stock when the company is taken public.

This is the only way a successful VC will participate with start-ups. The idea isn't new. It just hasn't been tried before with the investing masses. It actually sounds like a good idea to get in ahead of an IPO. It could offer competition to VCs. The only thing left to do is to screen the potential targets to filter out the lemons.

-- Jim Green

(received 5/11)

New Man on TheStreet Looks at NETA

Adam Lashinksy

: In response to your column

Network Associates' Larson Looks Out for No. 1, gutsy first move for a "new guy" at


A bit too strong? A bit too tough on

William L. Larson

, maybe? Then, again, maybe it will get Larson to be strong and tough in focusing on the core business.

-- Matt Kohn

(received 5/5)