Roger's 1998 Short Picks Message Board

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Strategies & Market Trends : Roger's 1998 Short Picks

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To: larry who wrote (3403)	2/22/1998 1:55:00 AM
From: Roger A. Babb	Read Replies (2) of 18691

Larry, this old bear agrees with you that the Dow will reach 10,000 by end of 2000. But I think we will revisit the 6500 level first. Down in 1998 and 1999 followed by a huge new bull market in 2000. I also agree that a PE of 20 is not unreasonable for the S&P 500. But the current market has two tiers. The first tier has a PE of under 20 and is very stable. Good long term investments. The second tier is the "bubble stocks" such as AOL and DELL with valuations based on growth and potential, not current performance. Many investors are margined to the max in the bubble stocks, buying more as the price goes up and they get free margin. The bubbles must burst and the tiers level out to provide a foundation for the bull market of 2000.

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