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

To: Lone Ranger who wrote (1194)	5/25/2001 11:30:18 AM
From: Justa Werkenstiff	Respond to of 10065

Sayrep: Re: "with all this really bleak news it seems like the market and particularly the naz, should go straight to heck without passing go. but the market seldom acts rationally in a logical relevant time sequence. is it possible, because of a greater number of households invested in the markets, and a quicker and greater knowledge base, that people in general are discounting this negative news, and realizing that in the long run, ie 6-18 months out(g), that the fed will win, and we will have seen a bottom and an eventual recovery?" Well, I would talk in terms of the market and not of households. You are correct. The market is discounting good times more probably six months out. And, yes, economic data is rearview mirror data and the markets look forward. And, yes, the Fed. will win eventually. But to the extent that forecasters continue to make errors assessing the downside with respect to this data (like Taiwan GDP or durable goods this morning or semi equipment orders) one must then assume that this trend will continue. So at some point, forecasters should reassess the growth going forward based, in part, on what has happened and continues to happen. They may well overshoot on the downside. After all, it would be consistent at this time to underestimate what is going on now and in the past and its duration and overestimate what will happen six months from now at this point in time. Well, at least those estimates going forward would come into question. This will be a lengthy process and other factors may come into play. The bullish scenario is for the markets to remain at this level or so until earnings catch up thus causing a spur in consumer spending from the wealth effect which will loop back into corporate earnings. Also, the bullish scenario calls for a good part of the world will jump on this bandwagon and make a gradual recovery possible. I think this has been discounted by the market to a large extent now and that any errors will be in the other direction. This is not to say that the markets crash and burn tomorrow. If it happens this will be a process.