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To: Jacob Snyder who wrote (9249)	9/28/2001 11:09:31 AM
From: John Koligman	Read Replies (1) \| Respond to of 10934

Since you are a student of the markets you probably know this, but Tice had some interesting comments on down market years... Regards, John Q. But what about the eight interest rate cuts we've had -- those are bound to kick in at some point aren't they? No, they're not, because the rates work in a cyclical inventory recession. They don't work in a bubble aftermath. There are only two economies that were similar to this economy -- one was the 1929 U.S. economy and the second was the 1990 Japanese economy. Those were both bubble aftermaths with massive capital investment, massive asset bubbles, and massive credit growth. Both of those ended with the central bank cutting rates time after time after time, and the market just went lower and lower and lower. Q. So you see this going on for quite a while? A decade. I think the market could be flat for 10 years. Over 104 years of Dow Jones market history, excluding dividends, all the return was earned in three secular bull markets: 1921 to 1929, 1948 to 1966 and 1982 to 1999. The other 58 years generated a negative return. Had you invested in 1929, it took you 24 years to recoup your initial investment. It took you 27 years if you had invested in 1966, after inflation. All the returns in the market are earned from the market going from a very undervalued level to a very overvalued level. That's the time everyone jumps in -- but it doesn't keep going higher, because who are you going to sell it to? It might be 25 years before you get back to Nasdaq 5000 - even though a year ago, people would have told you that's crazy. Q. What's gotten so out of whack with the economy? Credit growth has been the key. The way we got out of the 1998 crash in the market was to get individuals to go out and borrow a lot more money and refinance their homes. And we developed the Internet bubble and the telecom bubble in 1999. We took on a lot of debt. So it's like giving more tequila to a guy that's had too much to drink at 1:00 in the morning. It prolongs his hangover. He can keep going -- but the hangover's going to be all the worse in the morning.