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Pastimes : Ask Mohan about the Market

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To: Bonnie Bear who wrote (7403)	11/7/1997 10:59:00 PM
From: Zeev Hed	Read Replies (2) of 18056

Bonnie, I tyhink it took stock a good 15 years to get to the stage of overvaluation they have reached, I do not think they will reach fair valuation, not undervaluation (which in the case of a severe bear market they surely will) in few months. In between, the old models and the momentum plays will revive and shorting blindly into such revivals might be correct intellectually, from the point of view of fair valuation, but hazardous to your capital. By the way, in my calculations, the fair value is a strong function of the prevailing interest rates, if we slow down next year due to an Asian flue (I menat recession), then I would not be surprised to see a detachment between the long bond and the stock market (which already had in the last siz weeks). That could bring the bond, let say by the middle on next year to 5.5% and the DOW to let say 6200 (my current target in time and price for this minibear) which will be already a little undervalued. Zeev

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