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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Tunica Albuginea who wrote (74642)3/2/2001 2:16:20 PM
From: pater tenebrarum  Read Replies (1) of 436258
 
TA., because if you calculate the NDX p/e according to GAAP earnings (inclding write-downs iow) and count the losers too, weighted by market cap, its p/e is in the region of 800. that is still an immense overvaluation. virtually every industry in the index has vast overcapacities and is experiencing a collapse in demand...a situation that is going to WORSEN considerably before it gets better.

the other reason is that i am expecting a pattern completion. every other bubble that has burst over the past century has eventually returned to the first significant low that was made before the final blow-off...in the case of the NDX that's the '98 low. and eventually, that low should be broken too, if past post bubble patterns are followed.

that doesn't rule out sizeable rallies in between...in fact, i expect such a rally to start sometime during March.
but it will fail, and give way to a move to new lows imo.

public expectations run completely contrary to this - a common refrain is that a market that has fallen 60% from its high can't be expected to fall further...one also hears that there is 'undue pessimism'. that is not true. everybody's looking for a low...speculators are holding record high long positions in the stock index futures. no significant bottom has EVER occurred in the past when that was the case. at the bottom, the specs will be short.
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