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To: Dale Baker who wrote (12897)	12/9/1999 1:44:00 PM
From: Dale Baker	Respond to of 118717

The Yak Market 09-Dec-99 02:09 ET [BRIEFING.COM - Robert V. Green] This certainly isn't a bear market. But it isn't a bull market, either. It is a Yak market. The Yak The Yak is a long-haired "bull" like creature of the ox family. It lives only in the highest mountain regions of Nepal and Tibet. The interesting thing about the yak is that it cannot exist at anything other than the high rarified air of the upper Himalayan mountains. If a Yak is brought down below 12,000 feet, it gets sick and dies. Frankly, this is a better analogy for the current market than the traditional bull and bear images. The Forces Moving Stocks Many stocks are moving now based on forces that seasoned professionals cannot understand. The "lowlanders" are lost for an explanation of why stocks like Red Hat (RHAT) or Microstrategy (MSTR) are moving the way they are. But investors basing decisions on pure fundamentals and business analysis have been left behind in this market. The best performing stocks haven't been the ones with real business achievements. They have been the ones with the best story. The real winners have been those who are lucky enough to get into a stock before a whirlwind of demand drives it up three to four times over a matter of days. Who cares what the company really does? All you need is a crowd of people who want to buy the stock. This is where the real action in the market is. And for many stocks, that really is the only reason. Business developments are only the fuel that ignites the demand. The unfortunate thing about the current forces behind the market is that, like the Yak, if we ever descend below the clouds, those forces will dry up. The moment we have stocks going down 30% in an afternoon, with thousands of people invested, demand will start to dry up. What would happen to the market if demand reversed itself? We confess to having no idea when that will happen. Could be several years still. Yakkity-Yak The other reason why we call this the "Yak market" is that so many stocks are being driven by talk. Here's an example. Recently I had my picture taken for display on our Briefing.com site. While I was standing in front of the camera, the phone in the studio rang. The assistant answered it, then turned to the photographer. "It's Susan," she said. "She wants to know if it is a 2-1 split, or a 3-1 for split." "Tell her it is two-for-one," said the photographer. Then he turned back to me. "Sun Microsystems," he said. The assistant then turned back and said, "She says 'Thanks, she's going to buy some." The photographer looked back to me and said. "That's my mother." Yak Moves Stocks This anecdote, more than any other we've heard in recent weeks, gives a better explanation of what is moving the fastest rising stocks than anything else. Talk is moving the market. The neighbor's recommendation. The brother-in-law. The guy at work who made more money daytrading at his desk than he did in salary. He talks to fellow workers in the cafeteria, and they buy what he says. Then there are the message boards. We like Sun Microsystems (SUNW). In fact, we put it on our list of stock to own for 10 years (Stock Brief of December 3). But how many people are buying Sun because of yakkity-yak about splits, instead of because they believe Sun will revolutionize how software is sold, as an ASP? Disconnected Stocks At Briefing.com, we have been talking for some time about the concept of "disconnected stocks." (See the Stock Brief of December 1 for full details.) A disconnected stock is one whose trading pattern bears no relationship, at all, to the underlying business trends of the company. Trading in any stock always shows some degree of fluctuation due to shifting changes in investor perception. But only disconnected stocks can double, triple, or quadruple over a couple of days on no news. The problem with disconnected stocks is that it gets very hard to judge their direction. It is great to own one before it gets disconnected. But jumping in when it does get disconnected requires a complete abandonment of assessing risk. Let's hope people don't wind up paying for that anytime soon. Rarified Air The action in the yak market is fantastic. Isn't it great to see stocks rising 30% day after day? The only thing that isn't great about skyrocketing stocks is not owning them! It seems there are more people feeling miserable because of lost opportunity cost than there are people feeling bad because of actual losses. And that is puzzling, because more than half of all Nasdaq are down for the year. It isn't what most people in the "market guru" business would like to admit, but a large part of why the stock market is going up is simply because it is going up. It keeps going up, because it keeps going up, and people keep talking about it. All the time. As 1999 comes to a close, it looks like we will have a unprecedented fifth year of greater than 20% returns in the overall markets. This has never happened before in the US stock market. Existing descriptions, such as "bull market" don't do this market justice. We nominate the term "YAK Market" as the term for the type of market we have today. But let's hope that we never come down from this lofty height, because Yak's can't live at lower elevations.