To: Rarebird who wrote (36441 ) 7/3/1999 7:33:00 PM From: Zeev Hed Respond to
Rarebird, I am an observer of the scene, and my "turnips" bend with the wind quite easily. As of the last two years, I have maintained that we are entering a period in which the stock market will fluctuate in a fashion similar to the period of 1966 to 1982 (then it was between 500 and 1000), except that range will be 10,000 to 5000. As you can see, I must raise my top number because the market (once more) proved me wrong. My reasoning has been very simple, the market is a manic depressive animal (both with equities and commodities) and will go to extreme. I am not smart enough to tell what the top of the range of this manic phase will be, and I doubt we will have an immediate bear market over the next 18 months, but I do fear the first year of the next presidency (2001) will be a savage bear. The rationale for this stand has two legs, the first is the big bang in Japan which is going to flood worlds markets with liquidity, which when added to our own furious liquidity creation will fuel the equity markets beyond rational valuations. The second is purely political, the democrats have learned their lesson (the economy, stupid) and will not allow a bear market in an election year. My shorter term horizon actually has in it a solid retrenchment (about 15% or so in the DOW to just under 10,000 or so), and that scenario has two legs of its own. Decline in technology buying in the last quarter (except communications) because of irrational fear of Y2K, and the second leg is political, if the market keeps roaring ahead without abatement in the second half, there will be no room for a "feel good" stock market in the election year of 2000, thus the government must engineer the situation in such a way that the next bull phase starting late this year, like late October, early November, starts from a base which is not too high, or else the danger of a financial accident late in the election campaign in 2000 will be disastrous to the people in the White House.
