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To: kapkan4u who wrote (165735)	6/4/2002 2:45:24 PM
From: Ali Chen	Read Replies (3) \| Respond to of 186894

Kap, "Today we have the autos. Housing, pharmaceuticals and raw materials are next in line." I have a few thoughts on the doom subject. Look at historical behavior of, say, S&P500 index. From 83 to 94, for 11 years, the stock market was exponentially growing at 12%/year. I would say it was a good return, but I still have a simple question unanswered - how it is possible to make money out of thin air if the GDP was growing only at 2-3%/year. Therefore, even 12% does not seem quite sustainable, unless the grows was indirectly fueled by the third-world. On the other hand, the 11 years is a pretty long term for global feedbacks and adjustments, so let's optimistically assume that the 12% trend is a sort of sustainable target for the long-term markets. Now, from 94 to 99, the SP500 index was growing at a staggering 32% - in logarithmic scale the chart is linear piece-wise. Clearly, this kind of grows cannot go forever, and the bubble burst. Now we have a stable 32%/year decline, third year in the row. How low can it go? Assuming that the old trend of 12% is a sort of bottom line and represents some market balance, the stock slump will likely continue until the current -32% trend meets the old +12% trend. This will happen somewhere at the end of 2003, with SP500 at about 750 level, according to the SP500 chart. I think this gives us a somewhat reasonable indication when the stock market can start to recover: 1.5 years to go. - Ali