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Technology Stocks : SAP A.G.
SAP 254.41+1.1%Nov 11 3:59 PM EST
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To: Jay8088 who wrote (2457)9/3/1998 3:42:00 PM
From: MulhollandDrive  Read Replies (2) of 3424
 
J,

Zweig's opinion is interesting to me and I think has some validity, however, the majority of the stocks on the Nasdaq for example are already down on average 40%! The breadth of the market advance since the October 97 break has been absolutely awful. The soldiers have already been shot and now the generals are in the crosshairs. So I guess I would argue that the top tier selloff is key. I thought I heard a report that yesterday only the small cap index was up. The CRB index is at a 21 year low.....What happens to the yield curve if the Fed lowers rates?

I think the weakest part of his argument relates to the historical p/e level. At the risk of making a "this time it's different" argument, I would point out that never in history has there been the broad participation in equities by individual investors as we have today. You could argue that p/e's are necessarily higher by virtue of a supply/demand dynamic. More and more investors are chasing fewer stocks. Now obviously investors do not have to put their money in equities, they can go to low-risk fixed instruments, but I think most investors are convinced that they will need capital appreciation to fund their retirements. Historically that is best accomplished in the stock market.

bp
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