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To: Zeev Hed who wrote (203753)	11/10/2002 11:56:15 AM
From: Israel	Read Replies (1) \| Respond to of 436258

Zeev.. ok, well agree to disagree.. I also shorted ACF EMLX KLAC and a host of other POS on as you call it 'moral grounds' and it worked out pretty well... Care to guess who'll be right in the long term here?? I dont day trade as you do.. I could care less what the stock does in 2-3 minutes.. I'll get back to you in 4-6 months.. ;) there are so many stocks that are overvalued and technically broken. by the time the tea leaves show EXPE is 'technically broken' it'll be trading 20-30% from its highs.. I'd be no fun shorting it then.. Israel

To: Zeev Hed who wrote (203753)	11/10/2002 2:00:00 PM
From: ild	Read Replies (1) \| Respond to of 436258

... In his latest monthly comment, Bill Gross of Pimco presents a study from ISI Group that recalculates the Fed Model. Rather than dividing the earnings yield on the S&P 500 by the 10-year Treasury yield, the study divides by corporate bond yields, with the result that stocks still appear quite overvalued. While I don't disagree with that conclusion, the use of corporate bond yields as part of the Fed Model simply makes a bad model worse. Part of the twisted logic of the Fed Model is that by using the Treasury yield in the denominator, the model ignores both the growth rate of earnings (which increases stock valuations) and the risk premium on stocks (which decreases stock valuations), implicitly allowing the two to offset. Using the corporate bond yield in the denominator re-introduces the risk premium without introducing growth. And in either case, the numerator is wrong, since a portion of earnings must be devoted to providing for future growth, and is therefore not available to distribute to shareholders. In short, the Fed Model is simply garbage, and despite ISI's valiant efforts, it cannot be easily converted to a useful measure of valuation, even if the result might otherwise support our own conclusions. Still, valuations on the basis of fundamentals other than earnings do suggest that stocks remain overpriced. The S&P 500 index is nearly double its historical valuation norm on the basis of the dividend yield. Measures such as price/book, price/revenue ratios, market capitalization / GDP, and Tobin's Q are also unusually elevated. Moreover, as John Maudlin of www.2000wave.com notes, "the average over-run of the trend in secular bear market is 50%, which is why stocks get so undervalued. By that, I mean that stock market valuations do not stop at the trend. They tend to drop much lower. [For stocks to deliver 6-7% annual returns over the coming decade], we would have to see something which has never happened in history before. Stocks would need to drop to values 25% higher than the long-term historical average and no further." ... hussman.com