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To: Z268 who wrote (10014)	11/3/1997 8:34:00 AM
From: Zoltan!	Read Replies (1) \| Respond to of 77400

That article was written by Richard Russell who pens the "Dow Theory Letter". And the following is my opinion only: I read that investment letter on an irregular basis and find it just a little more valuable for investing than the comics. Seems if Russell were just a little more sophisticated he would be making sacrifices and divining entrails for market portends. Why does he start out by say "the greatest bull market in history, it can be argued, began in December 1974". While anything can be argued, Russell says that because he claims to have called the bottom sometime around then. Too bad for him that everyone else knows the present bull market began in the early 1980's. Imagine if the "Dow Theory" was generally believed, wouldn't that be a self-fulfilling prophecy? Not out of place for Halloween. No doubt Russell was at some point right before and will be again, he has been writing that letter since 1958 so others may differ and think he's on to something. Seems to me though the best information in his letter is on chelation therapy, which he has been using to clear his clogged arteries. A far better view is in today's WSJ, first, middle and last paragraphs: Manager's Journal Stocks Overvalued? Not in the New Economy. By LOWELL L. BRYAN Are stocks fundamentally overvalued? Is last week's turmoil the beginning of a sustained bear market, as stocks return to "normal" valuations? Almost certainly not. The world's equity markets have been driven to today's levels for good reasons: The cost of equity capital has declined, and the value of intangible capital assets has increased dramatically. 'Irrational Exuberance'? Since the performance of these companies was unchanged, what must have changed was the price at which the market valued that performance. Many attribute this change to "irrational exuberance." But our research indicates that the underlying cause is that the cost of equity capital is falling. Research by McKinsey two years ago estimated that there will be a $12 trillion increase in household financial assets by 2002 due to the aging of the developed world's population. The research also found that the demographic forces driving this extraordinary demand for financial assets will continue to increase through at least 2010. Many of these household savers, especially in the U.S., have begun to develop a clear preference for equities over bank deposits or bonds........ These developments have outstripped the financial accounting conventions, the capital budgeting methodologies and even the mental models most firms use to run themselves. Investors hoping for the market to fall to levels that feel more "normal" are likely to have a very long wait. Mr. Bryan is a partner in McKinsey's New York office. interactive.wsj.com Regards