To: MulhollandDrive who wrote (20172 ) 10/14/1999 4:02:00 PM From: Jock Hutchinson Read Replies (1) | Respond to
In terms of the overall market, we have seen erosion in the Advance Decline line for 18 months, so we are well into a bear market. What has held the averages up though has been the rush to large cap stocks. The reasons are many including primarily liquidity and increased market participation by Main Street USA. Thus, it is not surprising that the current valuations remain as high as they do. But at some time, we will see some sort of recession--most likely in the next year, and then we will see the large cap stocks take a hit as well, which will tell the rest of the world what is already quite obvious--that we are already in a bear market. The degree to which the bear market occurs will depend upon how much "House Money" is left on the table. In other words, the correction could be 15% or 30% from the highs, but probably not in between. My point is that people will let their money ride if they are still holding a profit long-term. But if the market starts cutting into their initial grubstake, then there will be a much greater sell off.
