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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Larry S. who wrote (42897)	5/23/2001 2:16:33 PM
From: straight life	Read Replies (2) \| Respond to of 54805

In re: "Fred Hicks (sic) redux: ...gloomy still" There's always a gloomy gus in every bull market. The author writes: "Hickey points out that one of the greatest rallies on the Dow Industrials was in 1931 -- in the middle of the market's greatest slaughter. He sees a similar pattern with what's happening now on the Nasdaq." Well, maybe conditions today are similar to those 70 years ago: maybe the unemployment rate, the pace of technological change, burgeoning international trade and our Federal Reserve attitude and resolve are similar to that benighted time. Every bull market has such naysayers; perhaps you recall Joe Granville in 1982; that tremendous bull market was never quite right; certain gaps were never filled or something. I came upon this today on Tek's SI Highlights thread: "Bill, if you were to force me to pick one or the other, a basket of gold stocks or a basket of stocks like CIEN, JNPR, BRCS, BEAS, EBAY, etc and I had to hold them for the next 10 years, I can honestly say that I would choose the gold stocks." Such comments make me smile: all bull markets need negativity, walls of worry.

To: Larry S. who wrote (42897)	5/24/2001 12:45:20 PM
From: StockHawk	Read Replies (1) \| Respond to of 54805

Larry, that was another interesting article (btw it's Hickey not Hicks). One of the interesting lines was this one: Hickey said. "People don't care about valuation. They just haven't learned anything." One of the plausible reason you hear why technical analysis should work is that stock price movements reflect the emotions of market participants, and human emotions do not really change over time - collectively people do make the same mistakes over and over again. Perhaps what Mr. Hickey is saying is true, perhaps people have not learned about valuations, and are still prone to follow the heard and overpay for a good story. And perhaps there is something else many have not learned, even Mr. Hickey, and that is how quickly things can change. One of the reasons so many people paid such high prices for so many stocks was because they were able to extrapolate current events into the future. A company's earnings improved 110% this quarter therefore they can improve 110% a quarter into the future. Internet usage doubled over the last 100 days, therefore it will double again and again. Mr. Hickey seems to feel that although stocks have fallen, they have not fallen enough because earnings have falling right along with stock prices. If I'm paying $100 for a company that earn $1 that is just as foolish as buying the same company at $10 after earnings have fallen to 10 cents. What's missing from his argument may be that the market always looks to the future. Yes earnings are depressed now. Yes inventories are too high, book to bill rates are too low, growth has slowed during this economic slowdown, but are these factors permanent? In many cases the answer is probably "no" and the market may be seeing this even before it happens. Or we may have to resurrect the WPA and sell apples on the street corner. StockHawk