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

To: Dinesh who wrote (46154)	9/4/2001 2:55:55 AM
From: Bruce Brown	Respond to of 54805

Not all of those drops happened at the same time. First difference from the 'tech' bubble. I didn't infer that they did happen at the same time. Nor would I expect them to if one adheres to the sector rotation through an economic cycle. Sounds like giving birth, but early expansion, middle expansion, late expansion, early contraction and late contraction are the 5 periods of an economic cycle. Within each period, certain stocks are bought or sold in anticipation of moving on to the next segment of the economic cycle. In other words, as some stocks go down, there are others that are going up in the face of the same time period. So the stocks I mentioned were examples of a few categories that peak and trough at various times within the economic cycle - not all the same time. Likewise, much of technology peaks and troughs at various times within the economic cycle. Knowing when to buy and sell financials, technology, consumer staples, basic materials, energy, capital goods, consumer cyclicals in terms of when those groups peak and trough helps identify when and why everything doesn't roll over at the same time. Two, the magnitude was much larger for tech stocks. I won't argue semantics here. However, the average share price contraction for those 7 stocks I mentioned (thus far) has been -48%. On a magnitude scale, that's a rather large amount. Sure, the magnitude scale would say a -70% to 95% loss is much more severe and I won't argue with that at all. I would argue that a drop of -48% certainly stings. In order of top to bottom (thus far), the share price reduction for that group I listed was GE (-40%), Wal-Mart (-41%), Callaway Golf (-48%), General Motors (-49%), Home Depot (-51%), Coke (-52%) and Caterpillar (-56%) for an average of -48%. IMHO not the same 'bubble'. It may have seemed* like a bubble to GM holders, souls used to much more modest returns than what they got in those heady days.* With all due respect, if we go back to the latest economic cycle expansion, the multiples and valuations of that above group did get rather bubble extended for their historic performance and built in just as much promise of future earnings prospects before they topped out and rolled over into a bear market. Was the magnitude less severe than "technology"? Once again, I'm looking at the bigger picture of the market that topped and rolled over in which many stocks were at unsustainable levels. It doesn't all happen in unison as the economic indicators come in and help the market make decisions. Nor will the recovery for all be exactly the same as the economic indicators come in and help the market make decisions. BB