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To: GST who wrote (100538)	4/14/2000 2:11:00 AM
From: Bill Harmond	Read Replies (3) \| Respond to of 164684

>>I don't think I have ever seen anything like the overvaluation we have seen these last two years -- ever >> At the height of the Japanese bubble, people were taking hundred year mortgages -- multi-generational loans -- to buy land for fear they would never own property if they did not do so. An eighty percent drop in real estate values left many people owning practically worthless property. Ditto for many small caps in Japan. But this is worse still. This is nowhere close to being worse. First the stock market is not directly financed with debt like Japanese real estate was. Margin is 1% of market cap and is short-term money. You can contend that US equities are financed through debt secondarily, but the average American's debt burden is nowhere near record ratios to assets nor income. Second, the Japanese real estate valuation bubble is no comparison. At its height in 1988-89 the Imperial Palace grounds in downtown Tokyo, based on adjoining property valuas, was worth more than all the real estate in the entire state of California*.(Morgan Stanley Research, 1989) Thirdly, based on p/e and inflation the average stock in the US is selling for the lowest price since 1984. (Value Line, 2000)