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To: SouthFloridaGuy who wrote (48638)	2/9/2001 2:51:21 AM
From: Steve	Respond to of 77400

The increase over 1995 was 42% not 50%. I left out 1995 because I peg the productivity revolution beginning in 1996. Forward looking PEs did not quadruple. Compounded earnings growth was on the order of 18% over that period for the broad market. Because this rate of earnings growth was unprecedented and in the Nasdaq 100 earnings growth was on the order of 20-30% per year. The Nasdaq over that same period grew at a rate somewhat under 20% per year. Pretty much in line with earnings growth. Japan is a special case. It was and is an export dominated economy with weak consumer demand. Japanese exhibit a strong savings rate which hamstrings their economy and leads to the paradox of thrift which says that in the aggregate savings can slow growth. This is what has happened in recent years. Past strong productivity growth is simply the accumulated wealth of Japan represented by its productive capacity. I believe that Japanese industry has been operating with much slack capacity. I haven't looked at BOJ numbers lately. But the point is that those productivity gains in the 1980s were real. Again I peg the bubble being a short lived phenomenon beginning in the 4th quarter of 1999 and ending in the 1st quarter of 2000. My analysis is sound and based upon the evidence. If you have a different interpretation that's fine but you must support your assertions with evidence.