To: clochard who wrote (41416 ) 7/6/1999 1:16:00 PM From: pater tenebrarum Respond to
Steve, that's the thing...i think we can all agree that the market as well as the economy are in a bubble that has been induced by easy money and record growth in credit demand. corporations are massaging their earnings numbers with an ever expanding bag of tricks; in fact the bull market and the resulting overfunding of corporate pension plans has done it's fair share of helping them to do that. no-one can claim that even the growth in thusly manipulated earnings has kept pace with the rise in share prices. as you say, it resembles a giant ponzi scheme. but we have to face the fact that the market has quite some time ago stopped to be accessible by means of rational thought. it is the nature of a mania that it can defy rationality for a long time, longer than most people think possible in fact. if you consider the perpendicular ascent in the course of last week it is clear that the much talked about blow-off stage has begun. there's no telling when it will end, but i am beginning to think that it could carry us a lot higher still. the only hope the bears have left is the fact that the bullish camp gets more crowded by the day, while the bearish hold-outs are now few and far between. but a market that ignores bad news and powers higher on any kind of news in fact, is by definition a bull market with strong underpinnings. it does not matter whether it defies all traditional valuation parameters, as they apparently no longer apply. of course, implicit in this is the possibility that it could reverse without warning anytime. the time to short it is when that happens with a convincing key reversal day or an island reversal, but probably not before.
