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To: Larry S. who wrote (30098)	3/18/2001 10:29:37 PM
From: Larry S.	Read Replies (3) \| Respond to of 53068

Sobriety: - March 18, 2001 Market Watch: The Future Won't Be as Good as It Was By GRETCHEN MORGENSON trillions of dollars in household wealth has vanished in the sickening stock market fall of the past year. College education funds have been pounded and plans for early retirements probably pushed back as a result. But apart from some finger-pointing and gallows humor in investing chat rooms, investors seem commendably stalwart about the pain they have endured in this bear market, the worst in Nasdaq's history. Such investor stoicism is something of a puzzle to many veteran market observers. Since many novices entered the stock market in the 1990's, it was assumed these newcomers would panic and scream bloody murder when their beloved bull was gored. But calm and quiet prevails, at least on the surface of the market. There are signs of suffering in indicators like consumer confidence and purchases of consumer goods and capital goods, argued Peter J. Tanous, president of Lynx Investment Advisory Inc., a money management concern in Washington. "My sense is that the anguish that people are feeling, they are keeping to themselves because the losses are so big," he said. "Investors are internalizing the pain but it's being reflected in the economy. People are sitting on their hands and their wallets." Mr. Tanous, author of "Investment Gurus: A Road Map to Wealth From the World's Best Money Managers," makes investor psychology something of a study. He fears that many investors are holding onto decimated stocks in the hopes that they will make a quick comeback, as some have in the past. A big mistake, in Mr. Tanous' view. And he provides a bit of arithmetic to demonstrate why. Take a popular stock like Intel, which has fallen 63 percent from its high of $75.81 in August. Many investors feel that Intel's dominance in microprocessors makes it a prime comeback candidate. Assume that Intel's shares rise 15 percent a year going forward, an enviable return by any investor's reckoning. How long would it take for the shares to get back to their high of just seven months ago? Seven long years. Plug in the same assumptions of 15 percent annual returns for the rest of the most popular shares in America and the picture is sobering indeed. These stocks may certainly come back, but if they do, it will more likely be over a period of years, not months. At 15 percent a year, Cisco shareholders would need to wait a decade for their stock to get back to its high of $82, seen last March. AT&T would climb back to its peak of last March in seven years. General Electric, which has lost a relatively modest 33 percent since its peak of last August, would need three years to return there. Microsoft would see $115 again in six years, while Oracle shareholders would have to wait nine years to regain their shares' peak. Nine years would also have to pass before Sun Microsystems stockholders would again see the stock's high of $64.66. Because it has fallen so precipitously in the past year, Yahoo would require even more patience from its stockholders: 20 years of 15 percent gains. This exercise is not meant to advise investors to dump these shares. Rather, Mr. Tanous wants to show how investors will have to temper their expectations and learn to be satisfied with the lower returns that are more typical of the stock market. While pundits and strategists quibble over whether the market has bottomed or has further to fall, Mr. Tanous said investors should instead bury any notion they may harbor that the bull market of the last decade will stir again. "I can state with a great degree of conviction that most of us will never see a decade in the market like the '90's in our lifetime again," Mr. Tanous said. "And until investors taper their expectations to more normalized returns, they're going to be in for trouble."