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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: marc ultra who wrote (2615)12/29/1998 8:41:00 PM
From: MrGreenJeans  Read Replies (4) of 15132
 
Marc

I think Bob's model which I think respects the long term trend and is tilted a bit to the long side is unlikely to go bearish as long as as the Fed remains friendly, the money supply spigot remains open and the economy remains without visible recession or overheating.

Marc, you make a very interesting point here. I have heard this point made by a couple of other people on this thread and I generally agree with it. However, I thought I have heard Bob mention within the past year or two that if the market moves too far too fast perhaps he would possibly disengage sooner rather than later. Although I am not saying he should be issuing a sell signal, the momentum in this market is very strong at the moment, it will be interesting to me how he will be justifying increasing his targets presumably with an increase in his S and P 500 profit forecast as opposed to an increase in just the price earnings ratio itself. It is also interesting to me to see him still very bullish at these valuations without calling for more defensive action, i.e. taking some profits and moving into cash. Market multiples this high mean that the economic environment must be perfect for these multiples to stay the same or move higher. Market multiples this high mean people are expecting greater profitably than Alan Greenspan is expecting in let's say the S and P 500. And is not Alan Greenspan good for possibly one more rate cut if the economy slows in 1999 as the federal reserve is expecting and is this conducive to greater profitability from American companies? I have some doubts. I guess I find the forecast from Bob and the forecast from the Federal Reserve at odds. Tough for me to reconcile.

Enough for now.
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