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To: ild who wrote (151305)	2/14/2002 6:28:00 PM
From: ild	Read Replies (1) \| Respond to of 436258

<<<Comstock Partners, Inc. Path Of Least Resistance Is Down An Overvalued Market Acting Badly Notice how the market has gone nowhere for over three months despite the supposed “good” news on the economy. The three major averages are all rolling over in what looks like a classic top while transaction volume is sagging. Today was a good example of the bad action as the market could not maintain its early strength and closed on a weak note. The touts are shouting about a coming robust economy and saying that the accounting woes will soon be forgotten, but the market is beginning to ignore the pollyannas They say that the retail sales were great if you just ignore the auto sales, which were the focus of the market when they were so strong in October. They brag about the decline in unemployment claims when we all know that corporations are doing every thing they can to cut all kinds of expenses including labor. They tell us about the coming rebound in technology when IT is a prime area for corporate cutbacks and the leaders of Microsoft, Intel and IBM tell us they don’t see any pickup soon. They tell us about the great results at Applied Materials when the company reported that it lost money, that business activity remained weak and that sequential revenue was likely to be flat for the fiscal second quarter. At the same time the accounting problems are not going to fade away, and this is not just a technicality, but something that goes directly to heart of the analytical process. Today Paul Volcker testified before the Senate Banking Committee that the ethical problems of Enron ands Arthur Andersen reflected broader conflicts in the accounting profession. He stated, “Enron is not the only symptom. We have had too many restatements of earnings, too many doubts about ‘pro-forma’ earnings, too many sudden charges of billions of dollars to ‘good will’, too many perceived auditing failures accompanying bankruptcies to make us all comfortable.” All in all the market is acting badly at a time when valuations are at historic highs and the economy is far weaker than it seems. In our view the path of least resistance is down. >>> comstockfunds.com