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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: Math Junkie who wrote (809)	3/19/2001 2:04:15 AM
From: marc ultra	Read Replies (4) \| Respond to of 10065

Ricard, re "why would the model still be bearish?" I think one thing inherent in most of these types of models by others as well as Bob's is that it's not just a smooth graph of a little more bullish or bearish. The model we know is binary. It's either bullish or bearish. However my sense is that once you flip that switch and go from bullish to bearish, you have to go through the prolonged bear market process and have the indicators screaming bullish and saying we've reached a bear market bottom before switching back to bullish. Perhaps once you've reached that point of calling a bear market, tremendous negative pressures have built up that can only be purged by a punishing bear market before heath can be restored. That may take not only a major readjustment in stock prices but almost always significant time as well. So I suspect these factors you mention are important in warning you of a bear market to come, but once you're actually in a bear you perhaps look at other extremes that tell you you're ready to come out. As to valuation it's very hard to say the tech sector e.g. is undervalued yet when everyone is warning and declaring no visibility. So we not only don't have a good estimate of next year's earnings but if growth is slowing down the multiple may continue to contract to one no longer consistent with a reliable fast grower. The price then is getting a double whammy. Until the economy and earnings visibility improve people may continue losing interest in paying up for tech stocks. Thinking something is real cheap just because it was a lot more pricey when thing were doing well a year ago may be a suckers game in many cases. There's no reason though you shouldn't have technical CTR's during this time since they're not really dependent on fundamentals but rather technical internals in the market Marc