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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (31739)	6/7/2000 1:04:00 PM
From: IQBAL LATIF	Read Replies (3) \| Respond to of 50167

I like the charts, I think we had another test of 1455 that is 1457 area today, I would lke this IIX AND DOT 25 days MA to reverse, nice looking basing pattern on some of these stocks that took a lot of beating recently, if we maintain this areas of support above the 25 days MA on IIX and DOT we are looking at decent run as I have expressed before, I think Friday numbers will be helpful, overall if we closely look at it we are not at the level on prime rates when inflation use to be between 5-6%, now with lower inflation we have series of hikes that have moved real rates definitely high, one another example very nicely expounded by Lee is the spreads we always talk about if you look at the Corporate baa and TB's we will see that these widening effects does slow down, for a white hot economy I would think that we will see a slow down and nice pattern of growth, for corporate profits the future looks nice Europe and Asia- Pacific are moving along fine. Slackening demand from these regions was a cause of concern in 1997-98 now with Euro on the scene I would think that European companies are doing great as it had lost 30% to 355 vis a vis $ from 118 to parity and than as low as 88 the $ looked strong but actually it was political crisis in Germany that made Europe week, now the European companies have really made good out of this competitive edge over $, DCX is one example in my opinion ALA and NOK others. I don't see $ gaining parity against Euro as a problem, once interest rates cycle has peaked, the investors who had bid the $ higher on basis of higher returns are now realizing that may be Fed is done with interest rate cycles, against sterling and Yen the $ losing strength is just realization that market thinks the interest rates cycle is over, if inflation would have been an issue and few more rises were to be expected than we could have seen $ stronger but may be that strength would be for wrong reasons. Although a falling market would have put skids under $.. In my opinion a range of 100-104 vis a vis Euro and 101 against yen and 1.48-52 against sterling is good level for $, I don't see $ weakness as flight of capital, in my opinion once we hit 4200 on Comp may be $ will regain strength instead of losing, the issue is the most of the Europeans understand the unique nature of corporate US that is attracting a lot investment capital. Corporate valuation on DCF model or 'rev' growth pattern or market share basis indicates one thing solidly that companies that attract most of the attention even sectors always keep moving in and out of favor. MSFT could have never been imagined to be cut to half in no time, we have comfortably done that and are still above 10000 on DOW or 3000 on Comp, this ability to cut the valuation is the root cause of strength of market. In knowledge based economy P/E ratio has lost all significance, a company investing huge sums on infrastructure with a lock on future e-business needs to be looked as investment in business under formation, the projected cash flow is the best tool to be relied upon PPRO made that guy second richest man on earth for few days but did that made any different to his life style Azim continued his pattern now those billlions are washed out does that make any difference on the economy of India or US, the people who suffered are theo nes who gamble this market for short run and are whipsawed. Naturally in an environment where we have a significant change in character of 'progress' huge infrastructure investments can distort market P/E ratios. if we coming out of old economy and getting into a new ?economy? to expect that all that future growth is priced on same old method of traditional slow moving sectors is little too far stretched. S&P 500 has historically very high P/E's but are we not at the leading and cutting edge of technology? From Copper to fiber optics this cyber based world offers a different set of problems and absolutely demands a new way to evaluate companies. If we had an S&P 10 when fire was invented or S&P 20 when wheel was invented even the man from cave in the stone age would designate new premiums as the economy would have moved up to a higher gear. Look at the size of human brain, from tools when protein intakes become higher the size of brain grew the neural connections became higher and man made huge strides into future conquering the control over destiny, that is how we are here at first place, a continuos struggle to progress, the premiums has always been higher now naturally this free thinking is not in the hands of mathematical economist whose models are failing them but we got to live with it and tale advantage of sale. Look at CMRC like Ketan highlighted yesterday CNXT was cheap at 30 highly priced at 130 but reasonable valuations can move the stocks from 90-35, now naturally that would mean higher volatility and better understanding of underlying set of currents powering this whole thing ahead, I of-course submit that 'old set of minds' who have been writing about SOX in last five years as nothing but hype or writing off MU. They have fixed set of approach, their minds are locked for me this is a battle between minds that can see beyond and minds who are stuck in times, it is very little about valuations it is about open mind, those who can see the leap forward and those who see conspiracies all around. The minds who can see the positive side without levels up or down would have less conspiracies in life the ones who see complications and ?they? or those? or ?them? were saved if inflation was low, bet with me they would have same approach to normal issues in life. If it was about valuations these very same guys would not have shorted DOW at 9800 recently looking at a twin disaster a fall of Comp from 5000 and fall of DOW to 7000.. like they misjudged the whole thing I don?t think that they would really know where are we heading let market show us the direction and lets keep open minds if the progress is real and productivity is gaining grounds and inflation has moves to lower gear we will see that economy will flourish and boom and bust will become less frequent I do concede that natural events can disfigure our forecasts and future models but we need open minds the first thing to trade, that is what I keep telling my kids ..keep an open mind and you would do well.. it is not aobut 1320 or 1510 it is about knowing the reasons that markets are up here even at 1000 on SPM, if the models they spew are right market is expensive even at 1000 we should be at 500..so that everything should 4 times the earnings.. give away party for those who missed it at first place. rarely that happens market are cruel place. Now and look at CMRC closely along and see if IIX and DOT 25 days MA move up get into them for a nice trade.. may be Monday is the day if things fall in place right,,