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Strategies & Market Trends : Waiting for the big Kahuna

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To: Oeconomicus who wrote (50488)	3/23/2001 1:19:01 AM
From: Rarebird	Read Replies (2) of 94695

<There is absolutely no basis for arguing that a 15 PE is justified based on a 15% growth rate.> I was being generous. Insofar as I expect earnings to turn negative for the NDX over the next year, I think it can easily fall under 1000. Again, you fail to see that there is no earnings visibility moving forward. This is why the NDX has been in rapid descent. The NDX is nothing other than a cyclical growth index. It should be bought and held at the beginning of a new upbeat economic cycle and sold short and held as earnings peak and assume their descent. What makes you naively think that this earnings recession has hit bottom yet? Plenty of high tech companies have clearly stated that they have absolutely no idea when the economy will turn around, such as AMAT and HWP. Moreover, I perceive the situation as quite ominous here. There have only been 2 periods in history when a central bank has lowered rates this much and the stock market has tanked as a result. Japan in the early 90's and the US in the Great Depression. The US consumer is completely taped out having suffered humungus losses in the stock market over the past year and is still carrying a tremendous amount of debt. The vast majority of Americans cannot afford to buy anything outside of basic necessities. The Bush Tax cut may help somewhat in this regard; but that won't come into consideration till the middle of 2002 at the earliest. As for the gold miners, they do extremely well in periods of deflation where their input costs are lowered sharply. Profit margins explode as a consequence. Many of these gold mining stocks have become quite lean and mean and their earnings last quarter showed surprises to the upside in spite of the low POG. The rise in the shares have been the result of an improved bottom line and not the result of any fear mongering by Bears or "Gold Bugs." The "superficial cash flow argument" was meant to be a reference to what I often heard from Bulls during the first quarter of 2000, where they argued that constant mutual fund inflows and 401K installments would prevent the stock market from ever experiencing a bear market again.

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