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To: Bob Martin who wrote (21958)	4/20/2000 3:13:00 PM
From: sea_biscuit	Respond to of 25814

Bob, I don't have more info about this particular study. I will try to get some more details from the author, if I can. But what I do know is a similar study done by Jeremy Siegel on the "Nifty Fifty" of the early 70s. (Ref. "Stocks for the Long Run", pp. 107 -- 1998 edition). Here is that list of stocks (along with their P/Es in Jan 1972) : Amer.-Express----------- 37.7 American-Home-Products-- 36.7 American-Hospital-Supply 48.1 AMP--------------------- 42.9 Anheuser-Busch---------- 31.5 Avon-Products----------- 61.2 Baxter------------------ 71.4 Black-&-Decker---------- 47.8 Bristol-Myers----------- 24.9 Burroughs--------------- 46.0 Cheseborough-Ponds------ 39.1 Coca-Cola--------------- 46.4 Digital-Equipment------- 56.2 Disney-(Walt)----------- 71.2 Dow-Chemical------------ 24.1 Eastman-Kodak----------- 43.5 Emery-Air-Freight------- 55.3 First-Nat'l-City-------- 20.5 General-Electric-------- 23.4 Gillette---------------- 24.3 Halliburton------------- 35.5 Heublein---------------- 29.4 IBM--------------------- 35.5 Int'l-Fla-&-Frag.------- 69.1 ITT--------------------- 15.4 J.C.-Penney------------- 31.5 Johnson-&-Johnson------- 57.1 Jos.-Schlitz-Brewing---- 39.6 Kresge-(now-Kmart)------ 49.5 Lilly-(Eli)------------- 40.6 Louisiana-Land-&-Expl.-- 26.6 Lubrizol---------------- 32.6 McDonald's-------------- 71.0 Merck------------------- 43.0 MGIC-Investment--------- 68.5 Minnesota-Mining-&-Man.- 39.0 Pepsico----------------- 27.6 Pfizer------------------ 28.4 Philip-Morris----------- 24.0 Polaroid---------------- 94.8 Procter-&-Gamble-------- 29.8 Revlon------------------ 25.0 Schering-Plough--------- 48.1 Schlumberger------------ 45.6 Sears-Roebuck----------- 29.2 Simplicity-Patterns----- 50.0 Squibb-(now-BM-Squibb)-- 30.1 Texas-Instruments------- 39.5 Upjohn------------------ 38.8 Xerox------------------- 45.8 As you can probably see, almost none of these can be called "hot mo-mos". Almost all of them had demonstrated the ability to grow earnings and cash flow over extended periods of time. What most of them had going against them, however, is high valuations. We come to this issue again and again -- high valuations are toxic to any stock, going forward. And btw, to address your first point, it doesn't matter whether we go through a bull or a bear market. The Nifty Fifty went through a terrible bear in 1973-74. Well, that didn't help them either! The real issue is valuations. If you go too high, you simply have too far to fall, unless you get out at or near the highs. As to your second point, yes, the cost basis for those who got in on the ground floor would have been much lower, but even those investors would have been better off selling when everybody else thought the world of those stocks, paid the capital gains taxes, invest the proceeds in the overall market and still come out ahead in the longer run. As they say in the real-estate market -- "location, location, location", so they should say in the stock-market -- "valuation, valuation, valuation". I am sure that they will be saying it sometime in the future; only not sure when they will be saying it!

To: Bob Martin who wrote (21958)	4/21/2000 12:01:00 AM
From: Jock Hutchinson	Read Replies (1) \| Respond to of 25814

Bob: Your question reminds of an event that happened over thirty-five years ago, when the late Martin Luther King was in Chicago. As was his custom, the late Richard Daley held a press conference to discuss ongoing events in Chicago. And at one of these press conferences, Dr.King came in unannounced and unanticipated. He thundered from the back of the room, "Mister Mayor. Do you know that last night twenty thousand poor children in Chicago went to bed hungry. What are you going to do?" To which Daley responded, "Give me their names."

To: Bob Martin who wrote (21958)	4/21/2000 5:08:00 PM
From: sea_biscuit	Read Replies (1) \| Respond to of 25814

I revisited your posting and have some more comments... If these 34 companies were already hot in '80, when the overall market was cool, then an extended bull market obviously would help other companies more than these 34. "Obviously"? So you think that if the bull-market carries on, the CSCOs, the INTCs and the MSFTs would turn out to be inferior investments when compared to some of the others that are out there and less-known at this point in time (like LSI perhaps! <g>)? I am not disagreeing with you. Just pointing out that the crowd doesn't agree with you! But what is even more obvious is that if there is a bear-market, all those "safe" stocks will get creamed beyond belief. So, why do people still hold those stocks? No idea! How did he define "hottest"? Based on underlying fundamentals, or just stock price? I would think that he defined "hottest" based on what the people were buying and trumpeting. If he were to be looking at the underlying fundamentals, he would be picking stocks, not studying and reporting on what the investing public was chasing at that point in time. Btw, I have asked the author of that Newsweek article, Jane Bryant Quinn, about more info on the 34 stocks that were mentioned in the article. I will forward the reply as soon as I get it.