Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : All Clowns Must Be Destroyed -- Ignore unavailable to you. Want to Upgrade?

To: Lucretius who wrote (34815)	5/23/2000 3:23:00 PM
From: MythMan	Read Replies (2) \| Respond to of 42523

Message 13760125

To: Lucretius who wrote (34815)	5/23/2000 3:37:00 PM
From: Crimson Ghost	Respond to of 42523

From Comstock Partners Black Hole The Gap Between Momentum And Value The market is continuing to slide as the "buy the dip" investors and momentum players are now beginning to realize that the Fed intends to stay with its restrictive monetary policy until it brings the GDP growth rate down to about 3.5% and halts the the inflationary threat. Investors are also becoming aware, that based on history, there is a clear possibility that the Fed overshoots its mark and clamps down too hard. The problem for the market, though, is that as the "buy the dip" investors and momentum players gradually ( or not so gradually) withdraw from the market, who is left to buy? Since the market has been highly overvalued for the last few years the major purchasers of equities have been momentum buyers, who bought only because the market was already going up. The problem is that even at these lower levels, stocks in general are still too highly overvalued to be attractive to value-oriented investors. The S&P 500 is still selling at 29 times earnings, far higher than at any previous cyclical peak over the past century, while the P/Es for technology stocks are still in the stratosphere. Even the venerable Dow is priced at 21 times earnings. This creates a huge gap or "black hole" between current prices and the prices that value buyers are willing to pay. With momentum buyers now becoming sellers (or reverse momentum players), we believe that the stock market indices will move toward more normal values, which are far below current levels.