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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: LTK007 who wrote (68506)	5/17/2002 5:01:02 AM
From: LTK007	Respond to of 99280

<<-- Beware Mid-Cap Value Considering the impressive performance of the mid-cap index, we are forced to consider whether it might be the wrong time to become bullish on the sector. Steven Galbraith, of Morgan Stanley, in an interview with Kathryn Welling (of welling@weeden), says, "I'm talking to mid-cap value managers and they are getting money in hand over fist -- and they don't know what to do with it." His point was that managers are being forced to look at larger caps and at more momentum-type names, but his observation has obvious implications for the mid-cap valuations as well. In a similar observation regarding small-caps, Michael Santoli, of Barron's, wrote a sensible piece two weeks ago noting that "one-third of all the money invested in small-cap value stocks arrived there in the first three months of this year." Many managers are now closing their funds to new investors. As Santoli concludes, "If these managers feel they are close to getting more money than they can efficiently and intelligently deploy, might it not be time for investors to ease up on this trendy area?" We would also observe that while the small- and mid-cap indexes have been rising, their P/E ratios have been rising as well. For the S&P MidCap 400, Bloomberg provides P/E data going back only to mid-1995. But whereas the current P/E is nearly 35, the average since mid-1995 is about 24, and it was below 20 in April of last year. For the SmallCap 600, the current P/E of 43 compares to an average of 29 going back to 1993, and this multiple was also below 20 in late 2000. These are trailing P/Es, and forward earnings estimates are going to be higher. But clearly, these sectors have become more expensive.>> For what it's worth, we also noticed that James Glassman, whom readers will no doubt recall as the co-author of Dow 36,000, recommended mid-caps in the Washington Post last Sunday. While conceding that it won't last forever, Glassman proclaims of this sector: "They're not too big, not too small, not too hot, not too cold. They're just right." After reading those words, trying to suppress our contrarian instincts would be futile.>>

To: LTK007 who wrote (68506)	5/17/2002 2:57:35 PM
From: Psycho-Social	Read Replies (1) \| Respond to of 99280

Broad Market & Tech: In my Business Sentiment indicators, I've seen a dramatic run-up in near term profit/revenue sentiment for the broad market to a fairly high level of optimism. While the Tech sector sentiment is rising too, it has come from lower levels and hasn't risen as much. Thus, there's more room for improvement in Tech. As a result, I recently took a small profit in an Equity Income fund, reducing my stock exposure from 100% to about 78%. I may sell off a Tech fund today or Monday. My indicators suggest that the Nasdaq may have begun to out-perform the broad market, because the cyclical recovery is just beginning there. Shorter term, I think we're getting close to the end of this rally.