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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: Justa Werkenstiff who wrote (13295)4/17/2000 9:05:00 AM
From: Carl R.  Read Replies (1) of 15132
 
Good morning Justa. I finally figured out how to get back into SI over the weekend. Seems it was just a cookie problem as I was sending back the wrong cookie. I haven't been trading much this year, and unfortunately I always do better when I trade. Usually I'm better prepared for market turmoil than I was this time, but when you aren't watching you portfolio....

Everyone is comparing this with 1987, and I'd like to offer another comparison. Instead of the 1987 crash, I think this is more like the Biotech crash of 1992-93. I have had this Biotech graph sitting around waiting for this to happen, but I've been too busy to look at it until last Friday. If you overlay the DOT index on the biotech index from that period they are just about a perfect match. The Biotechs did not fall all the way to "rational valuations" and I don't think that there is any reason to expect the internet stocks to fall to "rational valuations" either.

If my comparison is apt, then the DOT could fall further, to say 650, or it could stop here. It isn't likely to bounce very hard, though. Going forward I would expect the DOT to be very volatile, but to remain in the 700-800 range for the most part. As the group sorts itself out I expect winners to eventually reach their prior highs and loser to keep falling, with the net result that the overall index itself has trouble advancing. I should note that the Biotech crash didn't end up having all that much effect on the overall market.

Carl
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