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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Lee Lichterman III who wrote (38650)	8/5/2002 8:26:43 AM
From: Haim R. Branisteanu	Respond to of 52237

Anyone out there has an indication as to what the market expects today from the ISM Services index ? Bloomberg has it at 55%

To: Lee Lichterman III who wrote (38650)	8/11/2002 7:14:27 AM
From: Robert Scott	Read Replies (1) \| Respond to of 52237

The vast majority of investors don't have the time or the inclination to watch stocks on a daily basis much less on a minute by minute basis. As such, the indexes are the place to be. The re-balancing helps them because it purges the losers and inserts stronger companies. Having said that, it usually does so near the worst times but nevertheless, the indexes continue to far outperform what the vast majority of individuals and market gurus can do. The bears have had their market - now is the time for the bulls. I'm not overly bullish but bear markets are much shorter than bull markets and most if not all of the bubble has been purged. I know consumer debt is high but it was also high in 1987, 88 and 89 and the markets responded by climbing out of the rout in 1987 to post new highs in about 2 years. I certainly don't expect that but I wouldn't be surprised to see a strong rally during the next 2 years that will recoup much of the losses we've suffered over the last 2+ years excluding the Nasdaq which will take many years to recover. In the final analysis, what can you expect over the next 2 years? We've already had 2.5+ years of a bear - that's plenty long enough historically. This is not the 1930's in any way shape or form and anyone who expects that will get slaughtered. Look at the country and the economy now versus April 1932 and it's vastly different. Even if you believe it is similar, the market back then bottomed in June 1932 (33 months from top), so we've only got 2 months to go and it more than doubled over the next 12 months. I don't expect that to happen but it is equally ridiculous to think that the markets will be halved from here. Actually, my model flashed a BUY signal at the end of August 2001 based on the economic signals so my subscribers have certainly suffered but not even close to the amount they have benefited over the years. Who knows what would have happened absent the terrorist attack but I'm not making excuses. If the market took out x% due to the attacks, it will recoup it eventually. Most of the people who think they can beat the market with every turn especially with individual stocks will eventually be humbled. You can certainly make a killing in the short run but it doesn't hold up - it never does. The buy and hold strategy doesn't work either. The only way to beat the market in the long run is to rotate into defensive sectors near the right times and back into regular stock indexes near the right times. Most of the time this has worked using our model but it doesn't work every time. Being a perennial bear or bull doesn't work. Is there a compelling reason to own stocks now? I would argue yes with 1 caveat - Aug 14 is the deadline for corporate signoffs of financial statements - I would want to see how that works out. For one, the economic climate, while not robust, is still favorable for stocks. Two, while valuations are not rock bottom, they are more than reasonable compared to interest rates. Three, earnings have been washed out and comparisons should be great for a while. Four, lots of cash on the sidelines. Finally, corporate buybacks of stock have accelerated recently. We could retest the recent lows over the next 2 months but I think over the next 2 years stocks will be considerably higher than they are now. Incidentally, the lows on July 23, 2002 flashed a number of important Buy signals not the least of which was that the VIX (market volatility index) breached highs of the 2001 terrorist attack and the 1990 recession but not the 1987 crash which was exacerbated by computerized trading and the Fed Model flashed strong buy signals for the DJIA and S&P 500.