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To: Ptaskmaster who wrote (46839)	1/7/2000 12:50:00 PM
From: Alex	Read Replies (1) \| Respond to of 116764

Stocks will crash if you believe the 'mouthpiece' By JOHN GILMOUR Friday 7 January 2000 As the sharemarket nudges a record high, a veteran Melbourne broker is predicting a crash in which some share prices will "halve and halve again". Self-confessed market dinosaur David Lauritz says the current boom based on technology stocks will bust. He says his latest warning to clients is the strongest he has made in 42years' broking. Lauritz says he is a dinosaur because he still believes in assets, price/earnings ratio and that market capitalisations have to be serviced by profits. His more familiar appellation is "mouthpiece", a title to which he has answered for 30 years. Lauritz earned it for his ability to "talk under water" and for his habit of making great pronouncements about the market's direction. He signalled the end of the nickel boom in the 1970s, the great gold bust in the mid-1980s and various other market turning points. He has been wrong often enough to suffer occasional ridicule from other old traders, but right enough to be loved by his clients. He now serves those clients as an old-fashioned advising broker with the old broking firm of F.W. Holst Co. His bust prediction comes in a new limited-circulation report to clients, issued - in his words - to "discharge my obligation to clients". Dubbing the market a new "craze", Lauritz's circular states that a new breed of market player has driven Internet and telco stocks to absurdly high levels. "`Speculators' is not the right word for gamblers who are unconcerned with or pay scant regard to valuation, and plunge without fear of loss. "In the new craze, some of the gamblers are well ahead of the game. They may fail to recognise or are prepared to run the risk that ultimately a series of losses may cost them all the profits made previously. "If gamblers put aside their original capital and part of their profits, they may leave the market with fond memories of the most remarkable boom in Australian Stock Exchange history. Gamblers who quit early can win!" But he warns that more conservative investors are being tempted to participate in the boom late, and he predicts "they will almost certainly lose, and heavily". "Current market sentiment is such that the latest craze may last some time into the new year. "Nevertheless, 2000 is likely to be remembered as the year the craze ended. "In one important aspect, a year-2000 share crash in Internet dot.com or telco stocks would perhaps have more serious consequences than the 1987 crash. Most of the stocks that fell dramatically in 1987 were in companies that made profits, paid dividends and continued to make profits. Many of the new craze companies may not ever make a profit. "When gamblers flee the sector, it will stampede. "In many instances, share prices could halve and halve again within weeks or months." Lauritz says he can issue no stronger warning to clients. "In 42 years of sharebroking, I've seen two oil booms and booms in uranium nickel and gold shares. All those sector booms were overshadowed by the general market boom, which ended so dramatically in October 1987. "The lessons of history have not been heeded by today's gamblers. The suggestion that `it's different this time' is nonsense," he declares. "There will always be crazes and booms and enormous profits reaped by the few people who know when to sell, early." Even the "mouthpiece" is surprised by his own conservatism. "I am a bit of a punter, being what you might call an adventurous fundamentalist," he admits. "And if there's a game being played, I'll play pass the parcel too, but only once or twice. "This boom is pushing the game to extremes, and a lot of stuff that is commanding high prices is rubbish. Yes, rubbish." theage.com.au