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Strategies & Market Trends : Steve's Channelling Thread -- Ignore unavailable to you. Want to Upgrade?

To: Frederick Langford who wrote (18173)	6/17/2001 6:28:00 PM
From: Zeev Hed	Read Replies (2) \| Respond to of 30051

Frd, I think he is wrong, the great bull of the late 20' started at valuations that were a third of today's valuations, and we may have to spend the next 5 years or so letting the earnings catch up with the valuations through a series of "bulls/bear" markets, pretty much similar to the 1966/82 period, but shortened. In the 1920, the US market was strongly influenced from internal demographics, now we have to look at world demographics, rather than national demographics. In my opinion, there are going to be two drives going forward, slow reduction in worldwide birth rate countered with a larger proportion of the world joining in the "feast" of the middle class. In the early 1920, we also saw a major technological shift, mass production was taking hold, and communications started to become wide spread. In the last 20 years, since 1982 (and also starting with a PE for the S&P at around 8 or so, not 25), we were in essence under the influence of Moore laws, that served as a major driving force in the world's economies, and in the last ten years, with the end of the cold war, resources were assigned to more productive purposes (so much that we are facing a very large problem of overcapacity). Sometime in the period of 2007/10, Moore law is going to die, or at least slow down. While biotech may then finally mature and bear fruits, if health care captures much more than 15% of GDP as it does now, that will create its own imbalances. In the next 10 years, I really see no major "killer technology" which could replace what Moore laws has done in cost reduction, thus the world economy will be tied to population growth and the growth of the middle class. There will be great bull markets, but big bear markets as well, IMHO. There is going to be an equivalent to Moore laws in optics, but I doubt the impact will be as large as that of the IC revolution. We probably will have a five year gestation before that takes hold. I expect other developments in energy and superconductivity to provide some discontinuities, but that will be more in term of replacement of existing stuff and not a wave of completely new "killer applications" following each other every three to five years. Zeev