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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (3167)	7/24/2002 5:34:34 PM
From: stockman_scott	Respond to of 89467

Message 17788411

To: Jim Willie CB who wrote (3167)	7/24/2002 8:05:11 PM
From: SOROS	Read Replies (1) \| Respond to of 89467

John Mauldin has this to say in his weekly letter dated July 20, 2002 on this topic. I will end this discussion with his words because he says it better than I can. "And that brings us to the topic de jour: capitulation. The pundits on TV and the press tell us the bear market can't end until we get to some magical condition called capitulation. This is that wonderful state of affairs when all the wimps and fearful sell everything including the kitchen sink and there is no one but optimists and strong investors left. That is when we see the bottom and the next phase of the bull market will start. Massive sell-offs are the sign of this state of capitulation, and this weekend we will see many pundits tell us that the 700 point drop in three days certainly looks like capitulation. Now we can get ready to enjoy the summer rally. The problem is that there isn't much historical precedent for capitulation. Bear markets don't end in explosive sell-offs. They end with massive indifference on low volume days when no one cares anymore. Weeks like this last one are typical of the middle of bear markets, not the end. I was discussing this with Dennis Gartman this morning, and he reminded me of the vicious drops and rallies in 1974. The bear continued for quite a bit longer. We will soon have a bear market rally (I hope), and I think it could be something to behold. I note in passing that short selling interest is up, especially among smaller investors. Just like day- traders piled in bidding everything up in 1999, now we have a new breed of short-seller ready to make money on the way down. And after the rally, the market will sell off again. This cycle will keep repeating itself for quite some time. It will be like watching a couple doing the tango, back and forth, across the room, sometimes flowing effortlessly, and sometimes with hard stops and violent movement." End quote. One parting thought I leave with you. One way we can tell when we have reached a point near the end of this secular bear market is to keep track of the number of operating mutual funds. When the bottom is reached we will probably have an operating population of stock mutual funds around 10% of the peak total, which means when we see a number below 1,000 we can start looking for good stock investment opportunities again. That day will be a long time in coming in my opinion and will be measured in years and perhaps decades. gold-eagle.com