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To: Bobby Yellin who wrote (38497)	8/6/1999 5:35:00 PM
From: Bobby Yellin	Respond to of 116770

whoops ..now that I am using netscape I get the old si..possibly I had the beta on my explorer.. sorry- maybe the bear hasn't been heralded in

To: Bobby Yellin who wrote (38497)	8/7/1999 4:54:00 PM
From: Rarebird	Read Replies (1) \| Respond to of 116770

As suggested by Jim Grant recently, there is reason to believe that a touch of fraud has worked its way into the mania. In reality, one of the hallmarks of any mania is the deliberate deception practiced by the participants themselves, convincing each other that the environment is perfectly normal - a "new paradigm." Only in this manner may we see stocks such as eBay touted as a buy for its multiple of 55 times earnings - for the year 2009! Only in this manner may we see stocks assigned a "hold" rating when trading at $14 when the analyst doing the rating has a one year price projection of $6! How else might mighty Microsoft attained a valuation of 5.8% of the country's entire GDP? Has there even been a more laughable or blatant case of investor worship at a company altar? In our view, perhaps the biggest frauds perpetrated in the current mania are the stock market's own major indexes. Consider the following: between the beginning of 1998 and the end of the first quarter of 1999, the NDR Internet Index had roared ahead 176.6% while the S&P 500 rose 25.4%. The broad market of 3500 other stocks fell 10.7%. Was the market really up or was it down? Is this a description of a continuing bull market or of a bear market? Even within the S&P 500, half the gains came from the action in only 14 individual stocks! Even now, as nearly half of all NYSE stocks trade below their 200-day (10 month!) moving averages, the Dow Industrials stand with easy reach of a new record. Like we have said before, some bull market! Despite the recent strength in computer box makers and chip stocks, we believe the next step is hard down. All you need to do is to view the many advertisements in the local newspapers to realize that computers are now a commodity item and that the price cutting will continue until a sufficient number of manufacturers are either gobbled up by others or just go out of business, reducing the supply to below that of demand. Only then will prices rise again. In the meantime, margins will deteriorate and profits will erode. The cycle is well known and has operated quite visibly in the past. From the inception of the Semiconductor SOX index in May 1994, there have been three tremendous bull phases and two significant bear phases. The SOX roared ahead 184% into the mid-September 1995 high, dropped 54% into the July 1996 low, exploded 191% into the August 1997 high, plunged 55% into the October 1998 low and has now climbed a staggering 193% into the July 1999 high. Is another 50%-55% decline now in the cards? We think so. decisionpoint.com