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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank
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To: Jerry Olson who wrote (93585)4/16/2000 3:19:00 PM
From: kendall harmon  Read Replies (3) of 120523
 
OJ, there is one scenario which is have not seen anyone speak about, and that is the beginning of something really ugly. I agree right now with john Bollinger that we have a 60-65% chance of being in a bear market in earnest, and this is a good thing if it cleanses us of speculative excesses.

But there is about a 10% chance that something else could occur, namely a cycle of fear which gives us a market induced deeper recession than anyone now thinks possible.
You can make a scenario out to this end: people begin asking for mutual fund redemptions and the margin selling continues, Greenspan gives us two more rate hikes, the ecomony begins to slow, and then there is more mutual fund redemptions, and the economy slows even more.

This could give us a situation in which future earnings are much weaker than anyone now expects, in which case the market goes down further than anyone now anticipates.

I think this possibility not very high now, but it is a
possibility.

What bothers me is all the analysis this weekend saying this will be like 1987, i.e. a market event but not an economic event. The difference between 1987 and now is that the market is much more interwoven with the economy now than it was then. That is why Mr. Greenspan has been worried about the wealth effect recently.

It sure is not boring out there.
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