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To: BGR who wrote (70674)	10/21/1999 7:13:00 AM
From: Oblomov	Read Replies (1) of 86076

BGR, I'm not disputing that equities outperform cash in general over the long term. What I do dispute is the ability at the present time to find risk-adjusted value in the the S&P 500 and Nasdaq 100 indexes. I do agree that the markets are becoming more efficient in some ways, and that this makes profitable trading more difficult. However, if all market players were simply to invest in one index or another, then new inefficiencies would emerge - the valuation of an individual firm would no longer depend on its own merit, but on its weighting in the index. Also, the last five years has been a period of dramatic credit expansion. M3 has grown at a much faster rate than the economy as measured by GDP. Undoubtedly, much of this new money has found its way into the equity markets. Have the equity markets allocated this capital efficiently? If one were to observe only the performance of individual stocks in the market, one might think that the bulk of the U.S. is in the early stages of a mild recession, and that 50 or 60 companies were responsible for 25% of our total economic output, most of them high-tech firms. AA

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