Underlying the drop in equity prices, or perhaps even presaging it, will be the shift from equity based mutual funds to either fixed securities or alternative funds and a decline in the amount of equity funds in the markets. Since 1976 to present there has been the creation of over 3792 new equity funds. This is somewhat mind boggling. As the fund explosion continues, there was over 400 new funds created last year, the closer we come to the ponzi perception ending, whenever that may be. Capital must be continually be put into these new funds for them to crop up, and the signals thus far in 2000 are not what you would consider normal.
Volatility underlies the trend.
As mutual funds make their way through a transitional period of perpetual growth, to perpetual capital movement, the IPO market has already began to slow. Although this may be a temporary blip, the fact remains that when investment banks are not active their profits can suffer, especially if the volatile markets take a bite out of previously miraculous growth figures. Which could be high for an investment bank. In the end, the transitional period from the perceptual bull to a bear market naturally can continue to drag companies like Goldman Sachs lower. To those bulls craving an economic slow down, don't fret, it is coming.