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Technology Stocks : Semi Equipment Analysis

SOXX 348.14

+3.2%

4:00 PM EST

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To: Gottfried who wrote (992)	8/19/2001 11:46:40 AM
From: Think4Yourself	Read Replies (1) of 95748

There is one rarely discussed feature of current markets that I believe is the most important key to understanding what is going on... The retirement accounts. Bears say the market is overpriced based on history, and they are right. They further say the market will correct itself, and are shorting the snot out of it to try to make money off of it. On this count I believe they are wrong. There were major changes in how retirement accounts work a few years ago, most notably the introduction of the Roth account. There was also a push to educate people about how contributing to a plan where their company (partially) matched was the smartest thing they could do. Many persons had the minimum IQ (20+) to understand this and maximize their retirement contributions. Only a complete and total fool does not take advantage of such easy money, or someone who wants to live out their retirement years on welfare and food stamps. The result is that every week like clockwork funds flow into accounts where they will not be withdrawn for many years. That money has been, and will continue to be, put to work in the equity markets. I believe that is both why the markets regularly see strong rallies and why we will not see a massive capitulation. Think of all that money on the sidelines, just waiting to come back in. $2+ trillion waiting for a "big blowoff day" on heavy volume to rush back in. That alone virtually precludes the expected scenario from playing out. The retirement accounts won't sell, so who will? Anyone, besides the idiot Putnam fund manager, selling here? In conclusion, it is different now from 5+ years ago. PE's have risen and will continue to rise as long as there is so much liquidity and retirement funds continue to pour in each week to stay. There is a natural upward bias to the market that did not exist prior to a few years ago. I will still short on rallies but am increasingly becoming net long as we go lower. I believe the bottom will be nowhere near as low as many are expecting. Buy quality.

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