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To: Asymmetric who wrote (6092)	10/1/2002 12:42:03 PM
From: Asymmetric	Respond to of 6317

The Third Quarter Ends On Another Down Note Jim Puplava: Market WrapUp, Monday, Sept 30, 2002 The Dow Jones Industrials ended the month of Sept on another down note. For the venerable Dow it is the sixth month in a row it has finished in negative territory. Stock markets have been falling for three straight years and people still aren’t worried. You would think with almost $8 trillion in stock market value wiped out over these last three years people would be concerned, but they aren’t, or if they are they still haven’t shown it. I believe most people are waiting for the bottom. That is what the financial media and Wall Street have been telling them for over three years. The reason they haven’t been concerned, in my opinion, is that the price of their homes has been going up. The loss in stocks has been partially offset by the rise in housing values, so they figure they’ll just stick it out. Wait for stock prices to bottom and then cash out when prices rebound. The bubble in housing has helped to ease some of the pain in the stock market so most investors have remained complacent. This recession and bear market has been unusual compared to times past. Instead of leading the economy into decline, housing has remained strong throughout the business downturn. This recession has been mainly a business-led recession and the consumer has acted remarkably different. Instead of cutting back on spending, building up savings and paring down debt, the consumer has done just the opposite by reacting to lower interest rates by raiding the equity of their homes to go on a borrowing and spending spree. Savings have been depleted and debt has expanded to record levels. It is not just the spending habits that have changed in this recession and bear market, but it is also the investment habits that are also different. Instead of bailing out of stocks after two negative years, investors have held on. I can’t remember anything like this in my 23 years in the business. I met with a couple today that had a million dollar investment portfolio over four years ago. They are now down to around $250,000 if the equity of their rental is included. They went from tech and Internet stocks to junk bonds. They are now ready to say uncle. It is sad to see is how complacency has destroyed so many portfolios and retirement dreams. Even sadder is to think the worst is not over. This bear market will unfold in stages until stocks once again return to bargain values. It is going to take more downward bouts of selling before this bear market ends. When it does, stocks will be at bargain levels again, but nobody will want to own them.

To: Asymmetric who wrote (6092)	10/2/2002 8:15:48 AM
From: Sam	Read Replies (1) \| Respond to of 6317

Peter, I agree with you and McTeer: something is wrong here. But it isn't really surprising, we've just had an orge of investment, both in equities and equipment. Between Y2K and the building of Internet in, essentially, just 5 or 6 intense years (it's just incredible if you actually think about it and have any time perspective on it that the internet basically didn't exist less than 10 years ago), demand for investment went through the roof, and overshot a high roof. So, of course there will be a hangover. And of course most of us in the market got just as enthusiastic as the CEOs who were overordering and overbuilding, and are feeling a lot poorer today than we did three years ago. Steinberg seems goofy to me. He is either continuing to hold his nose while spouting a line favorable to his company or he is an idiot. Sec of T. Paul O'Neill said recently that he thought 4Q growth would be 3-3.5%. Where are they getting these numbers from? Every CEO other than DELL says business is frozen, visibility blurry or bleak, and who knows when the fog will lift. Dell says they'll have $200m more in revenue than expected, and, WOW, man, it's recovery time! What nonsense. But it's also nonsense to say that what will end of this recession is a tax cut for the rich, as Bush does. That is the last thing we need, with overcapacity all around us. We need a tax cut for people who will spend the money, not the rich who already have too much money to know where to spend it all. On inflation: two personal anecdotal tales: (1) just got my home insurance notice from State Farm. They raised our premium by 40%. I got it lowered to about 10% by increasing the deductible and decreasing the amount of coverage slightly, but still... They claimed it was because of increased claims and reduced stock market returns. (2) This is a small town with only two real supermarkets, Krogers and Big Bear, with a decent sized IGA outlet as well. The former is the pricing leader, and has raised prices by between 10 and 50% over the past two years. The other chains just follow them, often pricing their goods 5-20 cents higher than Kroger. It would be interesting to know if this is happening in other localities as well, or is this just a local phenomenon. It certainly doesn't show up in the CPI stats. Personally, I don't believe the stats. I think the govt just learned that they can save a lot of money by rigging them, and so they did. Anyway, I'm not buying this rally, even if there is a little Dell followthrough today. Still sitting on cash. Sam