|
Lee, I will try to summarize with as little malarchy as possible why WARNING FLAGS EXIST and we are late in the bull run game. 1) The market is OVERBOUGHT. I believe I read somewhere that COMP (or NDX) is up 55%+ since Oct 8 alone. This is astronomical returns in a full year let alone 2 1/2 months. 2) The market is OVERVALUED. The S & P 500 price/earnings ratio is now trading at 31.60. A year ago I believe it was 23.30. A decade ago, it was as low as 11.7. In 98' alone, in Q1 it was 27.7, in Q2 it was 28.7. It hasn't been this high since I believe 1894. Price to Book ratio is now over 6 X earnings, an all time high. I believe in 87' it was just over 4. 3) No breadth in this latest rally. Need full participation soon or "B" starts not walking but running. 4) Ridiculous levels of speculation in internet stocks. Several stocks like and Egghead and Books A million have traded such high volume relative to the number of shares outstanding at a clip of 2 to 1 and 5 to 1 respectively. It's like trying to flip 5 pancakes when only 2 exist. 5)Supply/Demand Relationship and its dynamics are changing. When the market tanked in September/October, investment bankers held back new IPO's because of a bad market and potential failure that new stock would not be received well. When market promptly reversed (Thanks AG), these new IPO's have flooded market with "narrow window of opportunity" as times got good again too quick. 6) I read a recent survey that said 90% of people polled said they would invest in stocks or stock mutual funds in 99'. Further, only 4.2 % expected the market to go down b/w 5%- 10% and only 3.9% expect it to go down more than 10%. Sorry, but if I'm a "bookie" (trader), I'll take those odds any day and play the opposite side of the table. The stakes are getting extremely high right now because of 7) Gravity still exists it is time to back away from the herd or be led to the slaughter. Lee, do you think I should start a different thread or should I keep these thoughts harnessed and forever locked in my head? JT |
