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Strategies & Market Trends : P&S and STO Death Blow's -- Ignore unavailable to you. Want to Upgrade?

To: Boca_PETE who wrote (3439)	7/13/2002 9:07:36 AM
From: Lone Ranger	Read Replies (1) \| Respond to of 30712

Pete, "Suppose the "Buy-and-Holders" do just that (hold on and not change their equity allocation) for the duration. Does that prolong this cyclical bear, or accelerate a cyclical bull to be followed by another more extreme cyclical bear?" I don't see how that accelerates a cyclical bull. A normal process needs to occur where people psychologically tire of this market, buying dries up and prices decline to a level where sustained enthusiastic buying returns. The fantastic bull run has so imprinted our minds that prices always return and eventually rise in relatively short order, that the process may take longer to play out. Of course, we'll have some rallies like Sept 01, and also short covering rallies, but we need to get the majority of selling out of the way, maybe more asset allocation shifting from equities to fixed investment will help, but prices need to drop low enough so that sustained enthusiastic buying returns. You know that historical pe levels at times like these are still high, especially compared to bear market bottoms, so unless people believe that the market will return to historical high valuations I think we have a ways to go, fwiw.