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Strategies & Market Trends : Waiting for the big Kahuna
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To: James F. Hopkins who wrote (23958)8/11/1998 8:31:00 PM
From: Pierre J. LeBel  Read Replies (1) of 94695
 
Good evening Jim.

You seem to think that a drop below 8000 on the DJ is the end of the world as we know it. NOT.

Let us assume that the market really drops over the next little while to the 5,000 level. Yes, 5000. No big deal.

Back in January 1995, less than four years ago, the DOW was sitting around 3,800 and many considered that level too high at that time. Should the market drop to 5,000 by year end, it would leave a net gain of around 1,200 points or 31% for four years (7% compounded annually) which reflects more or less the growth in the American economy during that period of time. The American pie would have lost some if its sweetness but it would still be there.

Investors cannot expect a 20% or 30% return from equity year after year when the economy grows at less than 5% during the same period of time.

It is WAKE UP TIME

Pierre
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