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Pastimes : NNBM - SI Branch -- Ignore unavailable to you. Want to Upgrade?

To: Clappy who wrote (3103)	4/18/2001 8:15:39 AM
From: Dalin	Read Replies (1) \| Respond to of 104197

Extra!!! Bear market? What bear market? moneycentral.msn.com What would you call a market in which 9 of 11 stock sectors are rising, some of them spectacularly? Analyst James Bianco calls it a bull and sees no reason why tech panic might spread. By Scott Burns James Bianco says we're not in a bear market. In spite of that, he is located on this planet. Bianco spends his time at Arbor Trading in Chicago and works with the Leuthold Group in Minneapolis. Indeed, it's his market analysis work that brings him to the conclusion that we're not in a bear market. Join the discussion on our Start Investing message board. A bear market, according to the rulebook, is a period when stock prices decline by 20% or more in a year. By that measure, we're well into a bear market. The Standard and Poor's 500 index has been off by more than 20% for weeks. The Nasdaq 100 is off by more than 60% from its March 2000 high. Literal trillions in market value has been lost. Happy investors are an endangered species. So how does Bianco come to his conclusion that we're not in a bear market? Writing to institutional clients in mid-March, he described what we're in as "the 80% Bull Market," demonstrating that losses were almost entirely in the technology sector. Technology comprises less than 20% of the total capitalization of the S&P 500 index. The other 80% is doing well. So well, in fact, that nine of the 11 sectors in the Standard and Poor's 500 index have shown gains over the last 12 months. Instead of being broad and inescapable -- as genuine bear markets are supposed to be -- this bear market could be escaped simply by being underinvested in technology and communications rather than overinvested. If you were a mutual fund investor, for instance, this means you did poorly if you were in the aggressive growth funds that tend to have big technology commitments. But you did relatively well if you were in conservative, value-oriented funds that tend to have small technology commitments. Skeptical? I don't blame you. Just to check on how this worked out in mutual funds, I went to the Morningstar database and found that funds investing in large value stocks provided a 14.36% return in the 12 months ending Feb. 28. Part of this performance came from their below-average commitment to technology stocks, a mere 11.4% on average. During the same period, large growth funds lost 25.96%, largely because of their 35.7% commitment to technology stocks. Now take a look at Bianco's figures showing S&P sector returns from March 10, 2000, to March 13, 2001. S&P 500 technology was down 58.33%, followed by a 38.26% loss for communications. But utilities were up 45.42%, and transportation was up 35.83%. Nor do things change much when you add the S&P 400 mid-cap stocks and the S&P 600 small-cap stocks. Include them, and things were still dismal for technology and communications. But they were close to spectacular for almost everything else. Sector S&P 500 S&P 1500 Composite -14.43% -13.34% Utilities 45.42% 42.26% Transportation 35.83% 31.01% Financial 32.62% 31.94% Consumer staples 22.06% 21.66% Health care 21.29% 18.17% Energy 16.56% 19.20% Basic materials 14.59% 16.03% Capital goods 6.59% 4.06% Consumer cyclicals 6.15% 8.62% Communications -38.26% -39.07% Technology -58.33% -57.34% Bianco's radical conclusions? First, the bull market is still intact, provided your investments aren't in technology. Second, losses in technology stocks (and the funds that invest in them) have been so steep, most shareholders probably won't sell because there would be no point in it. Instead, they'll hold their depressed shares and treat them as "lottery tickets" on a future resurgence in technology. That means, he says, less turmoil in the future -- and a chance that selling won't spread to other sectors. Whatever happens, this is clear evidence that we've just been through a major bubble in technology stocks. :0) The glass IS half full......dang it..... Ramblin optimistic