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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (6847)	11/2/1997 4:24:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 18056

Tommaso: I am not excluding the possibility of a deep bear market even to 50% of its top, I think this is less likely, but the market tends to go to extreme, it is now probably about 30% overvalued and it could go to 30% undervalued thus well within the framework you propose. I tnik more in term of about 25% bear market to about 6200 (which serve as a very strong resistance on the way up and thus could possibly provide support on the way down). As for the big corporate buy back, I agree it is misuese of funds. But if you remember IBM used to pay about $4 per share dividends (pre split) and now pays less than a buck. If IBM were to pay dividends at the same rate as before, why not pay it tax free? And this is what I was referring to, the big buy back are nothing but hidden tax free dividends and when valuing the market based on dividends yield, we should not be fooled by the apparent low yield, since if you take all these buy backs (which are tax free dividends) I think you may get you get yields well in excess of 3%. Zeev