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

To: Techplayer who wrote (52476)	5/28/2000 7:32:00 PM
From: UnBelievable	Read Replies (2) \| Respond to of 99985

How long can the NASDAQ grow at 30% per year while the US Economy only grows at 5%? From the Diary of a Fund Manager to which you provided a link: "Here's how I arrived at that approximate 3,100 number. The three year annualized return on the Nasdaq through Sept. 30, 1999, was 30.8%. The 5-year return to Sept. 30, 1999, was 29.2%, so the returns have been fairly consistent since the Internet Era began." A few things to consider: Even if the basic assumption could possibly be true a lot depends on where you start. On 9/30/98 $COMPX was 1694. Multiply that by 30% to get to September 1999, and that by 15% and you get to 2,532. To his point "we have exceeded the maximum of the range of losses of these corrections" In the Bear Market of Jul. 20, '98 - Oct. 8, '98 $COMPX penetrated the 800 day SMA.(Not to mention the 500, 600, and 700 day SMA.) In the Bear Market of Jul. 16, '90 - Oct 16, '90 $COMPX went considerably below all of these SMA's. In Sept. 13, '78 - Nov. 14, '78 it only went down to the 400 day SMA. In Jan. 1973 - Oct. 1974 the SMA's actually inverted but $COMPX was below all of them from November 1973 until February 1975. As of Friday the 400 SMA was 3,000, the 500 SMA 2,750, the 600 was 2,600, the 700 was 2,500, and the 800 day SMA was 2375. Keep in mind that all of the days which comprise each of these averages are within the 5-year return to Sept. 30, 1999, which was characterized by Robert Loest, Ph.D., CFA, Portfolio Manager, as having been "29.2%, so the returns have been fairly consistent since the Internet Era began." It is not that I don't like the idea of 30% growth (even if it is only 25% real growth <GG>). With only 25% annual real growth I could give my son $10,000 when he graduates college at age 22 and when he is 52 it would be worth $8,077,935. Even in year-2000 dollars, that is not too shabby. Even if he is right and the bottom is in (NOT), what is the rush? What am I going to loose by waiting in cash until September. Any market surge that looks like it is going to put things back where they were is going to be DOA. My perspective is just the opposite of his. I see a lot of downside risk and not a lot of upside. BWDIK I don't manage a mutual fund or even keep a diary. But I wouldn't want you to rely on me. Of course, past performance is no guarantee of future performance, but to take one more entry from the newsletter diary: April 15, 2000 "I expect we will see some more volatility this week, but that we will hit bottom sometime during the week , buyers will step in and stabilize the markets, and the worst will be behind us."