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To: Robert Scott who wrote (27586)	1/14/2002 6:30:31 AM
From: Steve Lee	Respond to of 52237

The valuation argument is not faulty and neither are PEs artificially high. PEs are what they are. If they are high, it is because they are high - there is nothing artificial about it. If you mean a low E makes it hard to judge then you are right, but if you take the highest possible PE - peak earnings - and compare those to prices, then that ratio is above 20 for the S&P. What that means is that if we get a V shaped recovery and stocks stay where they are, they will still be overvalued on a historical basis. On the manufacturing front, where is the evidence. NAMP or whatever it is called shows it is still contracting. BTW, UK manaufacturing figures came out today: "UK manufacturing output fell far to a five-year low in December, spreading more economic gloom. Manufacturing production declined by 0.7% from the previous month, and by 5.4% compared to December 2000, the Office of National Statistics said. Analysts, who had been expecting more moderate decreases of 0.4% and 4.9% respectively, said the numbers suggest that the UK economy still faces recessionary risks." news.bbc.co.uk As you can see from that excerpt, analysts here were also too optimistic, just as I believe they are in the US when they say you are coming out of recession.

To: Robert Scott who wrote (27586)	1/14/2002 5:49:53 PM
From: Vitas	Read Replies (1) \| Respond to of 52237

what is it about the situation, as you define it, that precludes a retest of the bottom more than two months after it has occurred? a 1/2 retracement of the Comp to 1743, or a .618 retracement to 1657 would be perfectly normal the time horizon for a retest is not limited to two months there was a stimulative monetary policy in the early 30's that obviously did not result in higher prices what criteria are you employing to monitor whether we may be slipping into that kind of environment?