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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: MrGreenJeans who wrote (4032)3/21/1999 6:14:00 PM
From: Justa Werkenstiff  Read Replies (2) of 15132
 
MGJ: S & P has been unable to get above 25x earnings. Stable or rising interest rates recently have made it impossible to get above this multiple. If the entire market were overvalued, this would be an easier call to reduce equity allocation in lock step with market overall increases. However, as we have discussed here, much of the market is undervalued by historical measures. This presents a dilemma. If one believes in regression to the mean based upon history, either the larger market catches up to the nifties or the the nifties fall back to the overall market. I believe the latter scenario is more likely but the question is when this will occur IMO. Tough call. Market in short term is unpredictable. If one does not believe the latter scenario will happen anytime soon or does not believe in it at all, one would continue to invest and trade for fear of losing out on profit opportunities.
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