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

To: Sam Citron who wrote (9472)	11/26/1997 9:59:00 AM
From: Cynic 2005	Read Replies (2) \| Respond to of 18056

Sam, I think I know Mike's answer but let me give you mine: 1. Yes the US equity market is currently a bubble. Many "new-era" believers don't believe it. 2. By many yard-sticks the market is at least 40% overvalued. 3. The cheap money policies of the Feds have helped create this bubble. Price inflation for consumer goods is all that matters to AG. That is less of a problem than the asset inflation. In a paper he wrote in the 60's, AG balmed the cheap money policies of the Feds in the 20's as the root cause of the depression in the 30's. Yet, he appears to be steering the country in the same direction now. -Mohan

To: Sam Citron who wrote (9472)	11/26/1997 10:27:00 AM
From: Mike M2	Read Replies (3) \| Respond to of 18056

Sam, I am not implying this mkt is a bubble. I am stating unequivocally that this mkt is a bubble of historic proportions. We have shattered virtually all the past valuation records i.e. price/book,pe,dividend yield,mkt cap as a % of GDP,public participation et.al. However, valuations do not work as a timing tool it simply highlights the extreme risk in the mkt although it is not apparent to new era investors. I must say I have been bearish for quite some time and that I cannot time the mkt but I feel a minimum decline of 50% from the eventual top is quite reasonable; it will probably be worse. I am sure entire books will be written about the bear mkt of 1998? assigning blame to many factors. I feel AG should have tightened money and run the risk of recession because I believe the coseqences of the negative wealth affect from decling mkts will be more severe but we shall see. Unfortunately, AG is boxed in at the moment due to the troubles in SE Asia. Some bulls are anticipating the next easing that would be like gas on a fire. I will briefly touch on a few of the major factors driving this bubble in the next note. Mike

To: Sam Citron who wrote (9472)	11/28/1997 7:17:00 PM
From: Mike M2	Read Replies (4) \| Respond to of 18056

Sam, i did not have the url before but here is what Alan Greenspan had to say about the role of the federal Reserve in the Stk MKT bubble of the 20's fame.org read fame.org Mike

To: Sam Citron who wrote (9472)	11/29/1997 11:41:00 AM
From: Cynic 2005	Read Replies (1) \| Respond to of 18056

Sam, you may find this piece from this week's Barron's interesting! It was revealed last week that Prince al-Waleed bin Talal, the multi-billionaire Saudi heir who likes to dabble in stocks, began buying chunks of three media-related companies that panicky Monday, even as the Dow Industrials cascaded 554 points. All in all, he put a neat $850 million to work by buying 5% of News Corp., 1% of Motorola and 5% of Netscape Communications. It might be thought that such a lavish vote of confidence would have lent strength to the shares in question. But on Monday, when word emerged of which frogs the prince had kissed, Motorola and Netscape posted losses, while News Corp. managed just a fractional gain. True, the Dow sank by 113 points that day on the latest Asian tremors. But surely some investors also were mindful that Prince Waleed's recent record has not been great. Although the Prince has billions of dollars in net worth and a home base well removed from Wall Street, he is no Warren Buffett and has, in fact, picked some real duds over the last year or so. Looks like I am not alone in judging one of the prince's purchases! -Mohan