The Internet and other information technologies slashed stock commissions, glutted investors with information and provided instant trading quotes.
Firms cannot slash stocks for ever.
The liberalisation of imports has also enabled companies to slash stocks, releasing funds for investment.
This implies that output will slow sharply over coming months as firms slash stocks.Many economists are starting to worry that the weak dollar will push up inflation, leaving the central bank no room to cut interest rates if the economy slows abruptly.
In particular, businesses emptied their inventories last year; manufacturing has enjoyed a rebound in recent months as companies have stopped slashing stocks, but Mr Magnus argues it is not self-sustaining.Mr Rosenberg says government incentive schemes have been behind the housing-market rally and the jump in car sales.
The continuing downdraft of net stocks slashed Priceline's stock to $27 by the end of August.
They have slashed their stocks and have already begun aggressive discounting, convinced that people will keep a closer eye on their wallets this year.Which is what Americans say they intend to do.
It slashed its stock dividend by almost three-quarters, and last month, it agreed to borrow $250 million on punishing terms, including an interest rate above 14percentt, from Carlos Slim Helú, a billionaire from Mexico.
Analysts were also oblivious to trouble at Intel that slashed the stock 22% on Sept. 21, and at Home Depot (-29% on Oct. 12), Globalstar (-60% on Oct. 30), VA Linux (-42% on Nov. 6), and Ann Taylor (-30% on Nov. 30).
The plunge would likely have been worse if the firm hadnt slashed its stock holdings, from 23% to 13.3% of its portfolio over the first six months, and bolstered its bond holdings from 52.1% to 58.6% of that portfolio.
