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To: dclapp who wrote (83515)	1/14/2000 10:01:00 PM
From: Les H	Read Replies (1) \| Respond to of 86076

Gersh on Washington 1-14-00: SMART MONEY GOES PESSIMISTIC? a special web column by NBR Washington Bureau Chief Darren Gersh I've noticed that the smarter the money, the quieter it is. There's a reason people who have many billions to move around are not yacking on the cable shows instead of doing their day jobs. If you're moving a lot of money around, you don't want others to get their first, you don't want to tank the market, and you don't want to share your ideas with the world. That's why I was struck when a former top economic official told me he has never seen such a disconnect between the optimism at the bottom, and the pessimism at the top. Retail investors are excited; the hedge funds and investment bankers are bracing for the worst. Now, this former top official (I don't like not naming names, but here confidentiality is the price of candor) has been wrong before -- he's been bearish for a while, but given his background, he simply can't be ignored. His argument is both quantitative, and based on personal exposure to top policy makers. The numbers tell this story: corporate profits as a percentage of total market capitalization has dropped from around 12 percent to below 6%. Check out the US current account deficit, and you see we are borrowing close to 400 billion dollars a year from overseas. That, he says, is unsustainable. "When it ends, it's going to be ugly." This former official says one of the nation's major investment banks gives a 30% chance of a "hard landing" in the next year. (Something I haven't heard its well-known strategist mention.) This is a glimpse into the debate taking place at the very summit of financial markets. Some very smart people are seriously thinking about when (not so much if) the bull market ends, and they are starting to plan how they will pick up the pieces afterwards. Small investors ought to be doing the same thing. nightlybusiness.org >>>of course, the other chance is 70%