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

To: mishedlo who wrote (15764)	1/12/2003 1:42:22 PM
From: Lizzie Tudor	Read Replies (1) \| Respond to of 19219

What do you think of Bernie Schaeffer? I don't follow that guy, the traders seem to know him and he called last year pretty well I must say. He has a wierd prediction, naz up significantly and dow (maybe S&P) flat to down. Maybe thats where you and I are getting our lines crossed because I am only tech and will remain so since it is the only area where I have a clue! Anyway think Schaeffer's prediction is possible? L

To: mishedlo who wrote (15764)	1/12/2003 9:24:42 PM
From: Dan Duchardt	Read Replies (1) \| Respond to of 19219

Over the long haul stocks return to the mean. Look at a chart of the DOW....., hardly even corrected. The S&P is about 3-4 times bear market bottoms in terms of PE. Everyone thinks this is a "tech problem" and that their stuff is safe. FWIW, in the long term returning to the mean is returning to the average rate of return, i.e., a linear best fit (regression) on a log plot. It happens that the S&P 500 has completed that trip on a monthly chart going back to 1950 (as far back as I can get from Yahoo data). The average annualized rate of return over that period is 7.27%, and the current mean value is 896. For all the reasons you have mentioned, it could go well below the mean and stay there for a long time as it did starting in about 1973 lasting until 1985 before ramping in front of the "crash" of 1987. Of course the recent data of the bubble has lifted the line higher than it was back in the late 80s to the point where the current line was not broken and held until the mid 90s. For the Dow going back to 1930 the average rate of return is 6.24% with the current mean at 6236. (The point to point annualized rate of return from January 1950 to now is 7.14%, comparable to the average rate for the S&P.)