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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: marc ultra who wrote (4904)5/3/1999 8:30:00 PM
From: marc ultra  Read Replies (2) of 15132
 
I think without getting into proprietary information lets look at some root causes of a bear market, something I would not be surprised to see discussed in the next MarkeTimer.
Tight money:risks of Fed taking away one of their 1/4 point decreases is rising rapidly but probably OK for the moment
Rising rates:long rates remain stubbornly around 5 2/3. With the economy maintaining momentum, not great
Inflation has risen a bit quarter to quarter on GDP deflator, still quite low on absolute basis.
Rapid growth- the BIG problem in my mind, economy not slowing down as much as predicted. Asia and Latin America all seem to be recovering to some degree loosening any external brakes. With the economy and the market powering forward if the Fed becomes no longer afraid of tanking emerging markets their attention will be fully turned to the strength in the US. With the Dow at 11K and people walking around with split beepers and sitting in day trading shops are they still going to be worrying about a rate increase tanking the markets?, I don't think so.
Overvaluation-certainly a good case can be made at this point and at these long rates.
Now let's discuss sentiment- we've gotten extremely bullish, only the II hasn't quite gotten over 70%. As Bob discussed on the weekend all the other measures of sentiment in his model are flashing over- exuberance. We may soon be living through interesting times

Marc
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