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Strategies & Market Trends : MDA - Market Direction Analysis

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To: Rarebird who wrote (40807)	2/20/2000 3:49:00 PM
From: pater tenebrarum	Read Replies (1) of 99985

RB, you missed my point entirely. i am not disputing that the technological revolution is an important event. of course our time differs from previous periods in many crucial aspects. however, the element of emotion remains the main driver of stock prices, regardless of what year it is. my RCA example illustrates very well what is happening now imo. decades of spectacular growth are priced in NOW. how else do you think can it be explained that cos with minuscule revenues command multi-billion dollar market caps? you could perhaps hope in the best tradition of greater fool investing that if a stock e.g. prices in 5 decades of growth now, it may just as well price in 10 decades of growth 6 months hence, enabling you to sell at even more ridiculous prices. that is quite possible, especially if the money supply continues to grow by leaps and bounds. no-one knows for certain when the manic phase will end. but end it will...for the simple reason that stock prices have in recent years grown much faster than any of the underlying fundamentals like revenues, earnings or more generally, GDP growth. why are the speculative sectors the strongest? that's how it ALWAYS happens. only when a bull market has weathered many a storm and has confounded the nay-sayers for a long time do investors seem to gather up the courage to bid the most speculative sectors higher. btw, i am not labelling myself anything either as your reply seems to imply. i.e. my trading decisions are not impacted by dogma...that would be quite foolish. i merely tried to shed some light on what you originally formulated as a question ("is it speculation or is something of a more fundamental nature going on?"). the answer remains: both. re: next week: it is not the bears that 'get' an index to decline. it is a surfeit of sellers over buyers that does that. regards, hb

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