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Non-Tech : Tulipomania Blowoff Contest: Why and When will it end? -- Ignore unavailable to you. Want to Upgrade?

To: EL KABONG!!! who wrote (3505)	7/5/2002 9:24:02 PM
From: Mad2	Respond to of 3543

KJC I might disagree with this statement should the Dow, the NASDAQ and the S&P revert to mean historical PEs. I'd need to see the Dow below 7000, the NASDAQ below 800 and the S&P at around 600, based on current expected earnings. This could happen with a severe and quick market correction (panic-selling) or the death of a thousand slashes, by bleeding slowly over many years. My view here is that in the late 90's index funds did well due to their low cost and benifited from the overall rising market values. If we assume the overall market is going to suffer or move sideways at best then investing that mirrors that behavior won't produce any positive return, however a correction to the levels you cite (7000, 800 & 600 respectively for the dow, nas and s&p) is a different situation......but certianly wouldn't want to be in anything indexed to those measures on the way down. I'm of the opinion that if you know how to value stocks, understand technical behavior of buying and selling as well as the business cycle that you (meaning "we" small investors) can easely outperform index and professionally managed funds. Most mutual funds are governed by the law of big numbers, in that its difficult for them to exploit the oversold and overbought conditions that readily exist in many small caps and thinly traded medium cap stocks, the area we can thrive. The fundies problem is their difficulty getting in and out as well as the amounts they need to buy. A billion dollar fund maintaining 50 positions would have a average of 20 mil per issue, thus they are stuck with large positions in larger cap stocks. BR, Mad2 PS we should start a thread devoted to finding stocks with the best absolute returns, sectors that are bottoming and undervalued as well as undervalued turn-around opportunities. Even with the current against the market the objective should be to idenitify those that can generate the earnings or cash to go up in price/dividend.