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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: Andreas Wappelt who wrote (19325)	10/27/1997 10:42:00 PM
From: Glenn D. Rudolph	Respond to of 61433

Initial thoughts on October 27 ... 10) Bears Beat Cicadas! -- Cicadas take 17 years to achieve glory, but the bears have only had to wait 10 years. 9) New Era, Old Rules -- We may be in a new economic era, but price/earnings ratios on the general stock market have never been able to stay above 25. They didn't this time, either. 8) The Test Is Afoot -- The most common line among portfolio managers trailing the S&P 500 has been, "Wait until a bear market. That's when active management pays off." Now's the time, folks. 7) If It Glitters, It Must Not Be Gold -- Just when does gold hedge a portfolio, anyway? U.S. stocks have been terrible for the past three days and gold ... has been worse. 6) Repeal The Slaughter Rule -- Can anyone explain what those stockmarket collars accomplish? They're like the slaughter rules in Little League baseball ... only the losers have to resume the game tomorrow. 5) Be Currency For Halloween! -- There's nothing that spooks the market more. The October 1987 crash, remember, was also sparked by dollars worries -- only it was the United States', not Hong Kong's. 4) Moving In Rhythm -- The argument for international diversification would be a lot stronger if all world markets didn't move together (read: down) when crises strike. 3) Four-Letter Words Are Good -- At least if the word is "bond." ... High-quality bonds haven't earned much respect recently, but when the panic hit they came through. They did in October 1987, as well. 2) Don't Bet Against Buffett -- OK, we already knew this, but if the rumors that Berkshire Hathaway Chairman Warren Buffett recently bought long- term bonds are true, then he's even smarter than his more-fervent admirers believe. 1) Money Tree Discovered! -- A simple prescription a) Buy the S&P 500 on leverage 361 days per year; b) Short the heck out of it every Monday in October; c) Get rich. You heard it here first.

To: Andreas Wappelt who wrote (19325)	10/27/1997 11:45:00 PM
From: Lee Martin	Read Replies (2) \| Respond to of 61433

To ALL: <<<I expect a very weak opening tomorrow, resulting in a DOW of 6XXX.This 6XXX can lead to some serious psycho-problems (e.g. panic!).>>> My estimate of the situation: Everybody knows that the US economy couldn't be better (high growth, low inflation etc.). The question is what effect are the currency problems and market crashes in Asia going to have on the earnings prospects of US co's and the US bond market. Clearly the flight to quality around the globe is having a positive effect on the bond market. The strong $ will make imports cheaper which will bring the inflation rate closer to zero and eliminate fears of a Fed tightening. The effect on the future earnings of US co's is the big question that is causing the panic. The huge multinationals that have some exposure to Asia will be affected as well as most small and mid cap. stocks that have no direct overseas exposure. The reason for this is most of the smaller co's reside somewhere in the food chain that supplies the larger fish. It will take some time before we know the effect on earnings, and right now the market is assuming the worst. The good news is that Abby Joseph Cohen thinks that the effect on earnings will be minimal and the market has over reacted (appearance on Moneyline 10/27). Assuming that investor's, mutual funds, institutions etc. are panicing and either selling stocks or remaining on the sidelines until "the worst is over", who is going to step up to plate and buy stocks to keep the market from going down the toilet ? Ans: The co's themselves. Most large US co's are sitting on piles of cash with share repurchase authorizations in place enabling them to buy back millions of shares. If the CEO's have confidence in their co's ability to deal with the Asian problems and are tired of seeing their market cap. evaporate, they need to tell their broker to put a brick on the buy button and leave it there until further notice. Once the market sees 500k+ blocks going off on the buy side from the big multinationals the street will think "if the co. is buying they must have confidence that Asia is not going to be a big problem for them and therefore the stock is cheap....... so maybe I should be buying". The market should turn around in a hurry in the above scenario. Any comments on the likelyhood of this actually happening ? If not, what do you see happening to cause the market to reverse course ? or are we going into a bear market ? Regards, Lee