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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: pvz who wrote (14864)	7/4/2002 2:54:00 AM
From: Warpfactor	Read Replies (2) \| Respond to of 23153

Thanks for clarifying the "Fed" model, pvz. It seems that no matter how you slice it, if you look at forward projected earnings, I do not see the case whereby the SP500 can be interpreted as currently overvalued. Using the FED model that is. I am looking at a chart (on Don Hays web site) which shows the Fed model back to 1979. As this is a subscription web site, I cannot post a link to it. It seems that in 1979, the Fed model achieved -37%. In 1980 it hit -30%. It appears to have tagged a -20% in 1993 and -17% in 1996. So unless we can draw correlations to the Jimmy Carter era, with that 10% inflation, the Fed model is currently sitting at the most extreme undervalue situation in 22 years. But you probably already are aware of that. This is not to say that the powers that be will not engineer the markets down another 30-40%. It seems to me that the "accounting scandal" is now to the point that it is just a gimmick employed at nervous times to push the indices down further. Terrorism plays the markets fear-factor as well: IMO terrorists will be hard pressed to come up with anything more grand than blowing up a bus or an office. (hopefully I will not be proven wrong over the 4-day holiday). As far as other macro-economic conditions: dollar vs. Euro and Yen, Consumer debt, etc.. I don't really have a clue how these would affect the markets down the road. Warp