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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (15148)	12/1/2002 4:23:45 PM
From: GraceZ	Read Replies (1) \| Respond to of 19219

The argument against us having seen the lows is made on a fundamental basis. Previous lows like we saw in 1982 were accompanied by far lower PEs. But what everyone seems to forget there was a pretty good reason back in 1982 that future earnings were so heavily discounted, we had double digit inflation. Any future earnings had to account for the fact that your money was losing a high percentage to inflation. Money market rates were 17% back then, who in hell would want stocks back then with their attendant increased risk unless they could get them at greatly reduced multiples? Now we have inflation at around a 1 to 2.5% range with money rates that are almost negative. There's a ton of cash with no where to go now that it's highly likely that the bond rally is almost over and real estate has clearly hit an intermediate top. Cash is trash right now. Who knows if we've made the lows or we'll see new ones. I've given up trying to guess how dumb people will get. I do know I invest in companies whose earnings and revenues are growing at a good clip with increasingly positive cash flow. In an environment where most companies you look at you see revenues declining, earnings disappearing and burdensome debt....these growth stories are far from overpriced. Meanwhile this recent rally shows long speculation isn't dead but then neither is the desire to continue to make money on the short side even while they're getting trashed by the action. They know they are right, that this market has no fundamental reason to rally up from here. The history of the market is strew with the dead bodies of people who wanted to tell the market what it should be doing.