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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Erik T who wrote (252)	10/26/2000 1:38:35 PM
From: quasar_1	Read Replies (2) \| Respond to of 74559

The Last Sale... So, even though they may still have strong revenue growth, the fact that it is slowing in many sectors makes it hard to justify the high stock prices and therefore many stocks can fall a long way and not recover for a long time despite continued actual growth in their businesses. Many stocks have been in a bear market since 1998. The popular averages, because of capitalization weighting, paint a very different picture. The market has been bifurcated for some time now—a small group of very visible, super high flyers that dominate the market averages and brokerage tout sheets. Then there is the invisible bear market in many quality companies that are absurdly cheap. I understand your point about the high flyers and I don't disagree. But it is important that we don't paint with too broad a brush here. The high flyers are one by one being taken out to the woodshed and shot right now. The generals are finally joining the troops if you will. This makes the headlines. But most companies (over 90% the last I heard) are meeting or beating estimates. Three of the stocks I own are growing upwards of 35 to 50% compounded and are selling at PE's in the teens. One stock will earn 2.60 this year and is under $20 dollars. Their earnings growth is tremendous. These are PEG rations far below 1:1. These can't be classified as overvalued by any stretch of the imagination. I believe a majority of stocks are undervalued. It is very easy to call the market overvalued without looking under the hood. Once again this is simplistic. The indexes are hiding the truth in this case. Unfortunately, this reality won't make it to the front page because it does not support the current dominant belief structure. Once again, psychology, not reality sets expectations and the 'last sale'. Q