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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Michael Watkins who wrote (46669)	4/16/2000 2:48:00 PM
From: bobby beara	Read Replies (1) \| Respond to of 99985

>>>>A return to sane valuations is not "doom and national ruin" ahead<<<< Michael, a couple of excellent posts. There is this bull market stoopid spekulator mentality that anyone who espouses that a return to realistic market gains/revision to the mean is enivitable . . . is a "doom and gloomer". I don't consider myself a doom and gloomer, just a realist. People have become far to fanciful in their expectations. This chart is a beautiful picture of a bull market peak: intelligentspeculator.com The nasdaq started to diverge from the trend significantly in 1990 when the public started becoming more involved in the market, and as the major averages started going sideways in 1998 the speculative nasdaq made a parabolic blow-off run, with people pouring money into tech stock funds and margined tech stock buying into the peak, people caught up in the "new economy" frenzy, not wanting to be left behind the get rich quick train, abandoning any kind of proper asset diversification - they were allocating 90% to tech in the rydex funds. I have to repeat the high school kid who they interviewed on tv yesterday next to his computer "it's just a correction" -g- NOT! i don't know how this will unwind, but i believe you are right the bottoming process will take a lot longer than most people believe, just like the topping process took a lot longer than bears believed. A lot of technicians will use bull market oversold indicators to buy dips and not realize that on the other side of the peak that these indicators will likely only be good for short countertrend rallies, if good at all. b

To: Michael Watkins who wrote (46669)	4/16/2000 3:47:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 99985

Michael, for whatever it is worth, I do not think that it will be like 1929. The reason is the economic environment. Then the actual economy actually contracted almost 30%, end demand disappeared, and the process of economic collapse took its toll on the market (and actual bottom was actually late in coming). On the other hand, we may go into a period like the 1966 to 1982 period in which the economy grew generally, but with recessions every two three years and associated bear markets punctuating these recessions. Thus, even if we reach a temporary low here around 2900 or so on the NAZ (or lower, who knows), I do not think that it is going to be the low. I see a long period of relatively wild gyrations in a broad range allowing earning to actually grow and bring valuation measures with historical standards (PE being roughly the proven long term growth of the company). Even idf we assume that on the average, for the NAZX this is 20, we are still a far cry from that. In the next five to 10 years, the dart method will fail, IMYO, and selecting stocks that lead their fields and that are in fields that have intrinsic growth rate far superior to the growth rate of the GDP will be the successful modality, also just IMHO. Zeev