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To: ild who wrote (136983)	12/3/2001 8:32:43 PM
From: ild	Read Replies (1) \| Respond to of 436258

Comstock Partners, Inc. What Would It Take to Make Us Bullish? We have been asked by a few of our viewers, “What would it take to make us bullish?” Our answer to that is fairly straightforward, but also somewhat subjective. We would like to see the stock market exhibit more of the conditions that were prevalent at other historic MAJOR market bottoms. We published a list of ten conditions for a major market bottom on May 30th 2000. So far we have met 6 of the 10 conditions, but the 4 conditions that remain happen to include some of the most important to us. The conditions that have been met, or are in the process of being met, are 1) Poor returns over the past few years. 2) Few mergers and acquisitions. 3) Weak economy. 4)Weak corporate earnings. 5) Interest rates declining while corporations and individuals are reluctant to borrow money. 6) The Federal Reserve easing to stimulate the economy. The conditions that have not yet been satisfied are 1) Very little public and foreign participation. 2) Very low expectations of future stock market returns. 3) Undervalued stock market. 4) Strong technicals. We will discuss each of these conditions as we see them presently. As far as condition #1, public and foreign participation, is concerned we would have to see much more net liquidations of mutual funds by the public and liquidations of common stock by foreign owners. There were actually 10 years of net purchases of equity mutual funds by the public, averaging $13.2 billion a month, and that was capped off with $133 billion of net purchases in the 1st quarter of 2000. We have experienced only 3 months of net liquidations over the past 19 months, with the only significant liquidation being the month of the Attack. The figures on foreign liquidation are not right up to date, but show the only month of net selling was also in September. It looks like the net purchases in both categories have been reestablished after September. 2) The public still expects to receive double-digit returns in the stock market even after the excess returns achieved during the later part of the 1990’s and even after the bursting of the largest financial bubble in all of world history. We believe the masses will “swear off common stocks forever” before the bear market ends. 3) We have discussed the overvaluation of the stock market ad infinitum and you can view these discussions in the archives after hitting first on “daily comment” and then going to the “drop down menu”. We believe history will be replete with quotes from so called professional money managers explaining why the market will continue onward and upward even as the market was trading at 2 times the valuation levels of prior market TOPS during the first quarter of 2000, and continues to sell well above prior historical market tops. 4) All the indices have broken down through their 200 day moving averages as well as support zones over the past year, punctuated with a few bear market rallies. Prior to the current rally the market rallied in March, April, and May with pretty good volume and breadth, but only the Dow penetrated back above the 200 day moving average. At that time we reduced our maximum bearish position to a still bearish position. As the rally failed we immediately went back to the maximum bearish position and remain in that position presently. We are watching the indices closely now to see if they move up above moving averages and resistance with good volume and breadth. We have learned in watching the stock market in the late 1990’s that stocks are capable of doing anything, and if they move up with good technicals, we will become less bearish and “get out of the way” until the move ends. This, however, is much different than turning bullish. It would take more of the remaining market bottoming conditions to change in order for us to turn bullish. comstockfunds.com