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Strategies & Market Trends : Waiting for the big Kahuna

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To: GROUND ZERO™ who wrote (31848)	10/17/1998 6:54:00 PM
From: Haim R. Branisteanu	Read Replies (2) of 94695

GZ, I agree with you with respect to the labeling of market moves. As there is a believe that stock market moves reflect the state of the economy a slowdown or recession is called a bear and revival and expansion is called a bull (for what ever reason) But this TIME IT IS DEFFERENT and the reasons why are related more to index funds or "indexing" the market. At issue are the big money pools such as insurance companies who sell financial products and pension funds. Those pools of money move in lockstep with the cost of money in their asset alocation models. IMHO one of the reasons of the calamity in the financial world has more to do with the movements of funds within those behemoths control than the actual hedge funds action. Most hedge funds manage money for pension funds and insurance companies to give a higher return for the overall fund. (up to 5% of a pension fund asset can be allocated to riskier investments). The competition and pressure to perform induced the high leverage of Long Term Capital for example (see their client list all fat cats) that is why the FED stepped in to help. To realy valuate the market those times you must go FED FUNDS adjusted versus SPX profits. The big question mark are profits!! (See Gilette report - very telling) Chart a rate adjusted chart of the SPX or DM adjust chart and it will start to be clear why the explosive move to the upside. - ADJUSTMENT - IMHO profits will disapoint, the FED will lower again and the wild card is again the CRB. Most interesting if true is the move into gold of those big institutions. This signals nothing good on the stock market horizon. IMHO we are presently at the upper level of the adjusted SPX trading range (no breakout yet) and may retest 1037 with a possibility to retest the 1010 range but not lower on the SPX, and from there we will possible move higher. Next resistance will be around those levels of 1060 SPX and additional 40 SPX points will only bring us to the adjusted level of late September, or 1100 SPX indeed very merry state of affairs in nominal $$$ but not in DM or Yen which will see the market only around SPX 1000 level in their curency. After that a constant and sure slide down and more capital destruction. The reasons?? well the contraction of the economy and lack of earning growth if not retreat. P/E's easy above 40 for the SPX or how much is $1 divided by one penny??? <gggg> Reason to be discusted - oh well plenty, the Behemoths Chiefs play with our future based on some Computerized Asset allocation models which only have proven recently that they are of no use in difficult times. And most important those Behemoths do not believe in old fashion cash because their performance will be equal to their peers <gggg> BWDIK Haim

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