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Politics : High Tolerance Plasticity
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To: energyplay who wrote (11409)1/3/2002 11:16:06 AM
From: MetalTrader  Read Replies (2) of 23153
 
relative to whipsawing I think this year will make many despair in that regard. I am of the opinion that what will work well will be an approach of decisive opportunism. Linger too long and the momentum will reverse.

In the previous post it is posited that it will be earnings growth, not p/e expansion that will drive valuations. I agree however I disagree that earnings growth will be quickly adequate to grow into reasonable valuations. The secular issues in the global economy simply do not indicate that growth will rekindle at previous levels for sometime.

As we come out of an earnings recession, much of the increased liquidity will go first to balance sheet repair. As long as inflation remains low p/e's will not plunge, but will drift downward on improving earnings. In otherwords price movement upward will be modest.

On the other hand I believe this modest market increase will be volatile. Investors will have to retrain themselves to understand that investing will require two decisions. When to buy and when to SELL. Not an easy change of spots after many years of buy and hold.

It's going to be a perfect environment for covered call writing programs for those who can't bear to part with their dear Cisco for even a minute.

Aggressive, decisive and disciplined should serve well in the next twelve months.

MT
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