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Strategies & Market Trends : Roger's 1998 Short Picks
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To: space cadet who wrote (14677)10/19/1998 5:25:00 PM
From: Greg Jung  Read Replies (2) of 18691
 
Every downturn will feel more scary, retesting 8000? I don't
know that is the proper terminology anymore. The week we saw the last "bottom" the DOW went nowhere (I think it INCREASED every day that week) while the nazdaq dropped like a rock. These are dominated by the top stocks, ofcourse, and the big drop was mainly due to the fall of Dell and Cisco. Numerically, anyway. Psychologically the smaller caps were also tossed away and beaten to such low levels, they may be more stable even after running 30% up.
Anyway, if your question refers to indexes my answer won't apply, I think small stocks can form a base and be steady even while the big caps get hammered. If we got a 40% cut on the DOW those would still be valued about 50% over values in smaller caps. For example, compare the conglomerates ALD and GY.
That's how I'm positioned, "market neutral" overall and hoping for a slow decay of the big-cap premium. Much of today's fashion involves
assigning PE based on growth rate. An imponderable, at best! Be a little less ambitious and tryplain old cash flow at no growth, you find value (provided nothing happens to the cash flow). When valuation is based on growth the surprises are frequent and uncomfortable.

Greg
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