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Politics : Ask Michael Burke
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To: Spekulatius who wrote (77458)3/9/2000 10:03:00 PM
From: pater tenebrarum  Read Replies (2) of 132070
 
Spek, i agree that's a possibility. even if there's no outright rotation, you can't fall far from a basement window...
but since a bear market in the majority of stocks is well established by now, who's to say it won't overshoot to the downside? that's what bear markets tend to do.
i'm watching a great many value stocks and have nibbled on some...it is tempting after all. but many i have considered buys a while ago have gotten a lot cheaper in the meantime. and i fear for these stocks even on a fundamental basis. consider this: a majority of the fresh margin debt and the fund inflows of recent months went into the grossly overvalued fantasy stocks. let's say this segment of the market tanks real bad...don't you think that an economy up to its eyeballs in debt would be in great danger of a severe recession if such a shock to consumer confidence were to occur?
if so, what looks cheap today may not look so cheap anymore.
after all, if whole sectors of the market can be savaged in what is hailed as a record economic expansion, what would keep them from tanking even more in a recession?
i really think this is the crux of the problem facing a value investor. the extensive boom was/is based on a credit expansion of historic proportions. therefore it stands to reason that the bust when it comes will be a real bad one.
cheap is relative.

regards,

hb
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