Auric Goldfinger's Short List Message Board

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Non-Tech : Auric Goldfinger's Short List

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To: Franco Battista who wrote (506)	10/23/1998 8:45:00 AM
From: Alan Newman	Read Replies (1) of 19428

Briefing.com agrees: The momentum continues partly based on fear - of missing out. But the action in the Nasdaq smells of speculative excess already. Bad news is being ignored as now all the good news is being priced in. This includes the belief rates are heading lower, global economies are stabilizing, impeachment is a non-issue, and commodity type prices are firming (semiconductors, oil, chemicals, etc.) Unfortunately, this makes the market vulnerable once the realization hits that the the "goldilocks" economy is gone. It is no longer no inflation with strong profit growth. Instead, it is no inflation with no profit growth. The kick is still there from the typical earnings season boost as most companies beat earnings expectations. However, bad news could upset sentiment quickly. Unless the U.S. economy picks up and so does the profit outlook, the risk/reward ratio on an S&P trading at over 27 times earnings with no earnings growth is cause for concern.

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