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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Lee Lichterman III who wrote (19262)	7/2/1999 8:29:00 PM
From: Vitas	Read Replies (1) \| Respond to of 99985

Lee, just for fun, draw an upward trending line from the tops in '73, '81, '87, '98. Just for fun. decisionpoint.com Vitas

To: Lee Lichterman III who wrote (19262)	7/2/1999 8:41:00 PM
From: Casaubon	Read Replies (1) \| Respond to of 99985

It can't go on indefinately. Two factors make that scenario impossible. Greed and net redemptions. I am worried about an extended bubble psychology, which you question as possibly being permanent "new paradigm". The problem is one of demographics. Will the boomers sink all thier money into equities until they retire? Certainly greed will beat that scenario as smart money pulls the rug out from under them before they get the chance to retire with all that "expected" cash. On the other hand, if there is no crash back to fundamentals and reality, before the boomers retire, the net redemptions from equities starting ten years hence from the boomer retirees will shock the market back to reality. Thus, the bubble cannot expand ad-infinitum.

To: Lee Lichterman III who wrote (19262)	7/2/1999 8:42:00 PM
From: Michael Watkins	Respond to of 99985

Lee, Such cheery thoughts! I think the hype factor will be attenuated at some point, only to start up again as sure as the seasons. Eventually the world returns to worth. You can't eat a mania, can't dress your kids in a mania. It may not be for some time, or it may be tomorrow. It may be a catastrophically tragic event that causes/forces/ensures a rebalancing, or a series of period rebalancings, but sure enough, it'll happen. I'm hoping the next rebalancing will "simply" be a savage pricking of this mania, and feel that in itself would be no catastrophe except for those affected. I will feel no sorry for those people. Personal accountability after all. Interesting that the object of speculation - the Internet - is in fact fueled by same. So much hype, fear, greed, exploitation - largely made possible by the Internet. I don't think Tulip mania had that working for it. I suppose this is in fact an argument for hyper-extreme valuations before the bubble bursts. In the meantime I'll trade the market any direction that makes sense (which lately is long but flat every day and spare powder in the keg) Tuesday is another day.

To: Lee Lichterman III who wrote (19262)	7/2/1999 9:12:00 PM
From: Benkea	Read Replies (1) \| Respond to of 99985

Lee: "If this is indeed true, then the bubble may never pop and the discussions we have here all the time may be the same discussions that were being made in the 70s about the Dollar when it was unpegged and set loose to rise to power across the globe." The situation you describe is a bubble economy. It takes money to buy stocks (even when driven on a supply and demand vs. fundamental model). The mania is largely a result of low unemployment (everyone is working and buying stocks) and incredibly low interest rates (which are now trending the other way). The -1.2% savings rate tells you this WILL NOT go on forever. There is only so long you can build a pyramid scheme. If this economy slows down and unemployment rises by even the smallest margin coupled with higher rates (which eat more disposable income), there will cease to be the necessary liquidity to drive this thing. With so many highly leveraged consumers (with easy 125% home equity loans), their debt ratios have got to be stretching any reasonable underwriting guidelines for credit extension. I would not underestimate the HUGE infusion of liquidity brought about by the re-financing at much lower rates of appreciated real estate. However, that positive trend for the market is now finished! PS. Don't forget that autos are the 2nd largest household expense, over 50% are leased, and that auto leases are not included in gov't consumer debt numbers!

To: Lee Lichterman III who wrote (19262)	7/2/1999 11:11:00 PM
From: Berney	Read Replies (1) \| Respond to of 99985

Lee, that was a gutsy and honest discussion! Being a student of fundamentals, there have always been two classes of stocks; those that trade on a historical perspective and those that trade on future potential. Both have their dangers, risks and rewards. The point being that we cannot "type" all stocks into a particular pattern and need to recognize that patterns change. The bigger issue is that it is a liquidity driven market. Actually, that's just a fancy term for supply and demand. As long as demand is there, it's onward and upwards. However, I do believe that the concept will be tested one or more times this year. Americans are typically short-sighted, but the Y2K issue will rear its ugly head eventually. In the meantime, the economy is in full gear. Berney

To: Lee Lichterman III who wrote (19262)	7/3/1999 2:55:00 AM
From: Dragon 1	Read Replies (2) \| Respond to of 99985

Ah ha, now that's one of the greatest posts I have read. I have been reading this thread all evening and could never fend off the drowsy bugs. But I woke up when I read yours and now I am totally awake. Somebody said it before that best pictures this thread:"Greater fools looking at fools dancing in the street." If KISS is really meant for the STUPID, I would rather be the one dancing instead of waiting for, say, AOL dropping to the 20's. Up till now, all major indices have broken out to new highs, leaving the nuts in lagging streams comparatively. If history serves any guide, today's action in IIX and DOT is a prelude to the nuts revisiting their old highs. Gurus on this thread can talk all the talk, but the fools will dance all the dance while money is being made by those who don't know sh-t about a fraction of what is being discussed here. I can't wait to see where the Dow and Naz are gonna be by then. Keep waiting or keep it simple and act? This is a question. Now your post really destroyed my good sleep tonight, you FOOL<ggg>. At least you sound like a very seasoned FOOL<g>. Have a great holiday. Regards PS No offence to anyone who is likely to be offended by my personal opinion. I love this thread and have learned a lot from it whatever angle one may look at it.

To: Lee Lichterman III who wrote (19262)	7/3/1999 5:09:00 AM
From: bobby beara	Read Replies (1) \| Respond to of 99985

>>>>What I mean is, what if for all future time, the piece of paper stock is no longer a representation of the company but instead only a symbol of a traded issue that is either in an uptrend or downtrend and the market is moving purely on a momentum basis<<< Lee are you trying to get the Irving Fisher award of 1999 -ggggggg- Everybody starts talking this way after 5 straight up days, vix at 19 and p/c at .47 -gggggg- Read you above statement and then contemplate that the lion share of investment/t/a books were written surrounding the go go markets of the 20's and 60's and now the 90's. Also that phrase is scarey, because thats something out of the South Seas Bubble or Tulipmania. and then you got the former Cab driver with his book on the best seller list, for years, and jockey Chris Antley with his investment newsletter (just hyped aol, cmgi and yhoo before missing out on the triple crown), then there is barbara trading ebay between recording sessions -g-, and the list of modern era shoe shine boyz goes on and on, Shoe Shine bobby

To: Lee Lichterman III who wrote (19262)	7/3/1999 10:03:00 AM
From: HairBall	Read Replies (2) \| Respond to of 99985

Lee: As often a very good post. All investing is based around sentiment. Fundamental analysis is based around the expectation that others will eventually notice the under valued Company. Thus sentiment based on this recognition will drive the price. It still boils down to sentiment. There is a myriad of sentiment motivators, but Market sentiment (emotion) is the driving factor for not only equities, but also much of what happens in life. There have been manias in the past. There have been new eras in the past. Eventually these events conclude, as the Market will eventually punish the exuberance. Those caught at the wrong place at the wrong time will pay the most. This punishment will bring sensibility back in line until the memory fades and investors are ready for another mania. The fading process can take as long as a generation, maybe longer depending on how severe the punishment. Just note in general the reaction by parents, young adults and even some children that experienced the Great Depression of the 1930's. Yes, the ones that created the wealth in the USA via hard work and saving. Yes the savings that many boomers have been spending. I believe that all (including Fundamentals) is revealed in the analytics. A reckoning is coming for this Market, exactly when, will be more obvious than most think! Most will just choose to ignore it! In the mean time, take advantage of the rallies....just make sure you don't go on vacation while long...<g> Regards, LG

To: Lee Lichterman III who wrote (19262)	7/3/1999 10:28:00 AM
From: James F. Hopkins	Read Replies (1) \| Respond to of 99985

L3; RE >> What I mean is, what if for all future time, the piece of paper stock is no longer a representation of the company but instead only a symbol of a traded issue that is either in an uptrend or downtrend and the market is moving purely on a momentum basis with people rushing to jump onto what is rising and falling regardless of what the actual company is doing. << ------------------- IT's a Mo Mo market ,it's been here for 3 years anyway and will stay that way until the day the new DOW triggers shut down the market several times and she drops 50% or more in a week. Then we will know what happened in Japan but then it will be to late. ----------------- BTW the dollar was manipulated last summer so that we saw a 19% correction, adjust it to the dollar index and you will see it was a 27% correction, but only the money monkey investment bankers managed to get the extra 8% discount. Jim

To: Lee Lichterman III who wrote (19262)	7/3/1999 11:22:00 AM
From: Lee Lichterman III	Respond to of 99985

>>The US dollar like many other currencies used to be pegged to the dollar<< Yeah right, that made sense, NOT!!! Hopefully you all heard what I meant and not what I said. I meant of course our currency used to be pegged to Gold. Sorry. Lee

To: Lee Lichterman III who wrote (19262)	7/3/1999 12:20:00 PM
From: Ken98	Read Replies (3) \| Respond to of 99985

Lee, its the Beanie Baby market - people are willing to pay a hundred bucks for a bag of plastic crap (costing 30 cents to produce) so long as someone else is willing to come along (or we think they might come along) and pay $101. Its that simple. Value is simply what someone else is willing to pay at this point. The question we have to ask as investors, and the facts we have to be aware of, is what event will cause the investing populace to realize that the emperor has no clothes? I agree with you that no such event appears forthcoming. Earnings? Hah! No one cares and everyone is willing to discount future earnings (to the extent there are any) at higher and higher multiples. The reason why interest rates have not affected the market any more than they have is because people are not valuing stocks on the basis of discounted future earnings but rather discounted future potential earnings. Very subjective and very etherial. Its all about confidence, confidence that someone else will come along to buy your beanie baby for $101. That confidence is the product of a lot of things: significant market returns over that last many years, late in the business cycle, Fed easy money policies, mass psychology, etc., etc. Its the same in the commercial real estate business. I am seeing the same things now that happened in the mid-80s. Smart people that have gotten fat during the last several years of the up-cycle at the very peak of the cycle make a very bad, sloppy mistake in judgment - they determine a value (and so does their lender) based on a linear determination of increasing demand and revenues using a very low discount rate of those revenues. Kind of a triple mistake, and it takes a lot of "confidence" for these smart people to make that mistake. That mistake is most frequently made at the very peak of the cycle. It is the embodiment of Bobby's tallest building indicator. The only thing that will cause this market to decline is something that will affect investors confidence. If you can figure that out, or recognize it if and when it occurs, you will be ahead of the game. Happy 4th, Ken.