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Strategies & Market Trends : The Amateur Traders Corner

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To: Roger A. Babb who wrote (13326)	9/3/2001 11:00:17 AM
From: BelowTheCrowd	Read Replies (1) of 19633

I tend to agree, but I'm not sure that this time we'll see a final catclysmic decline. In many ways, the worst possible scenario would be for stocks to simply stay "stuck" at some level, as earnings slowly catch up. To those who are margined, it would be a slow, painful drain and a lesson about the excesses of the bull market. I think we don't necessarily have much lower to go, but we might have much longer to go. Part of my gut reaction is, in fact, contrarian. Too many people are talking about how we're going to have one final decline, then a bounce back into another bull. I think we'll have neither. Like most real bears, the recovery will be drawn out. The low valuations will be seen when earnings start recovering but stock prices DON'T react, because all the weak hands have left the game. This isn't all that unusual for a real bear market. Historically the lowest valuations (at least on an earnings basis) are seen towards the end of the bear market, when the earnings start growing faster than the stock price. mg

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