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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: jeffbas who wrote (10346)	4/15/2000 1:44:00 AM
From: James Clarke	Read Replies (1) \| Respond to of 78517

I would add one more open question, perhaps the biggest. Is the Nasdaq at anywhere close to the kind of valuation where the invisible hand steps in to force a bottom. i.e. where companies take themselves private or where you get cash takeover deals (or at least a plausible case for them) or at the very least large share buybacks. I don't think we get there until the Nasdaq is well below 2000, if not much lower. And I can't think of a sector that has bottomed without those kinds of things happening. I agree with you, next week we probably see a trading rally - whether its off the current price or 10% below that remains to be seen. But that may be a rally to short.

To: jeffbas who wrote (10346)	4/15/2000 1:52:00 PM
From: Don Earl	Respond to of 78517

<<<This feels and looks like October 1998>>> More like March of 1997 when the Fed wanted to see a stronger Dollar against the Yen. Or maybe it's like all of the artificially induced panics that hit the market every 6-9 months including October 1998. This round was triggered by the swarms of faithful investors who believed they could buy Microsoft at any price and nothing bad would ever happen. It doesn't matter that Department of Justice antitrust proceedings were in the news on an almost daily basis, the faithful kept buying anyway. No sane person could possibly believe raising the cost of oil and bumping interest rates once a month is going to slow inflation. I can't think of any two factors combined which would be more certain to increase consumer prices. It raises everyone's cost of doing business and those cost increases are passed on to the end users. In a tight labor market, raising costs to consumers is absolutely certain to cause laborers to demand higher wages. I've watched a number of Greenspan's speeches and my impression is that he's a nice old duck that no one has the heart to fire because he's senile. As long as he waffles on every issue enough to quote anything he says out of context, he gets to keep his job. In the mean time the Fed wants to get the Yen back up in the 110-115 range regardless of what it does to the economy or equity markets. These panic sell offs also put a lot of liquidity back into circulation. The usual cycle is profit taking, margin calls, bottom fishing, short covering, and then the big short squeeze. Short term, I think the best bet is to raise cash to do some bottom fishing later and maybe park some money in REIT's which will be reporting earnings and dividends over the next few weeks. The REIT's are less volatile than the rest of the market and most of the dividend pay outs are substantially higher than money market rates. Earnings tend to benefit from higher interest rates and a lot of them are trading at a discount to tangible book. biz.yahoo.com