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Strategies & Market Trends : Waiting for the big Kahuna
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To: bobby beara who wrote (33280)11/8/1998 1:50:00 PM
From: Haim R. Branisteanu  Read Replies (2) of 94695
 
<<<crash to 5800, however the underlying fundamentals didn't warrant
that, so we had a failed H&S pattern and now we go much high>>>

BB would disagree with you regarding the fundamentals. By any count the DJIA should trade more around 6000 rater than 9000 based on fundamentals. The reasons are;

1. Interest rate environment qualifies an P/E of around 20 and not 28 as it is presently.

2. Growth rate of future earning slipped into negative so lets be optimistic and say steady to small % growth.

3. In such an environment P/E should be rater BELOW the 10 year treasury actually in their historical range of 16 to 18 PE.

4. The reasoning is very simple, the business environment has changed and owning stock is more risky than owning treasuries.

Now fundamentals aside we are in an new Tulip Mania much more dangerous than last July surge. Even if world economies stopped to get worse, it does not mean they started to recover.

The US market upside move "justification" is hope at a time wen it is clear that it was intentionaly manipulation, as I wrote before, by the duo AG and RR with the purpose to re-elect the democrats.

Now my assumption are not so original anymore, as BARRON published the same in this week edition.

Those days I long for a totalitarian regime, from time to time there are real long term benefits in an anti-capitalist environment, the manipulators would go to jail, no questions ask.<gggggg>

BWDIK

Haim
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