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Strategies & Market Trends : Asia Forum
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To: Stitch who wrote (7177)10/16/1998 11:21:00 PM
From: yard_man  Read Replies (2) of 9980
 
OTOH -- returns for the last few years from the indexes have been phenomenal in any reasonable historical context and the prospects for real earnings growth going forward are slim.

Simply put stocks are not cheap or a good value, in general, especially those that are leading the indicies and those that account for the lion's share of the market's cap in the US. I know Zeev has arguments here concerning stock buybacks vs. dividends, but such arguments assume a perpetuation of the returns and earnings stability at least, if not growth.

My approach may be simple compared to many, but I ask myself simple questions that I believe are quite relevant:

What is
1) the probability of continued appreciation in stocks?
2) the probability of a continued economic expansion?

Does the length of the current "run" imply anything about the probability of the continuation? Or is every year a new ballgame -- essentially independent of previous events?

You will not be hurt by having the largest portion of your holdings in cash. Just a thought.

I don't know about the market. Perhaps we will have an apocalyptic event of sorts, perhaps not, but why not be prudent and stay mostly in cash? Certainly volatility has increased and there is more risk as of late.

Take care,
Tippet
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