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To: a3blue who wrote (7510)	7/31/2000 5:34:08 PM
From: pater tenebrarum	Respond to of 436258

that may very well turn out to be correct...the various sub-sectors have been diverging for quite some time now. however i don't see in what way your method differs from other market timing approaches, as you are proposing to be long some sectors at the expense of others. if one eschewed market timing altogether in the bear market period of '68 - '74 that would have entailed holding a diversified portfolio throughout (you couldn't have known in advance which sectors would be the best/worst performers) and you would have lost exactly what is suggested by the losses in the major averages. in inflation adjusted terms the low came in 1982 btw, not '74, and the losses were almost as devastating as the losses suffered in the '29 - '32 bear market adjusted for inflation. what type of market we will face in the period ahead depends imo largely on the disposition of the credit bubble that is the foundation of the asset bubble. in a deflationary resolution a la Japan, no prisoners will be taken. if the resolution is inflationary a la 1970's (unlikely imo), a more divergent market is going to be the likely result. it remains to be noted that only very few observers are actually calling for a bear market. the consensus view is that the bull market will resume...albeit at a slower rate of growth. if so, one is probably better off in ST government debt, as middling returns can be achieved there as well, only with much less risk. as for the state of the market, some sub-sectors are in a bear market right now, some are not. the majority of stocks IS in a bear market, as the collapsing a/d line attests to. a truly diversified portfolio that doesn't reflect the survivor bias of the constantly re-jigged indices and their cap-weighting is in fact underwater since April '98. all that said, it is of course possible that the bubble re-flates for yet another run. not my opinion at the moment, but i'm trying to keep an open mind.