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To: robnhood who wrote (10332)	12/5/1997 10:05:00 PM
From: Defrocked	Read Replies (1) \| Respond to of 18056

RE: "but there is something very different about this rally" Russell, I agree with you. Previous rallies have not been accompanied by this extraordinary level of relief and hype nor with a yield curve exhibiting schizophrenic tendencies as in today's trading. Moreover, past rallies did not appear to me to be expanding into slower economic growth forecasts. These forecasts must be universally wrong or given a, say, only a 30% decrease in real GDP, the market is willing to pay for the equities which will undergo serious expected P/E realignments to an even higher level. IMHO the market is pricing in an incredible source of unknown earnings growth or relying on the greater fool theory to sell stocks at higher multiples than exist today. BWDIK.

To: robnhood who wrote (10332)	12/5/1997 10:16:00 PM
From: Zeev Hed	Respond to of 18056

Russel, if you look at this rally as the first rally in a full fledged bear market which is going to shaveabout 25% off the top (to my target of about 6200 by June or so), then the rally make sense. The small caps become dirt bargains under BV, the growth high tech are only half way to their bear market valuation at about 1 to 2 BV, and the darlings are still roaring (including MRK) at 6 to 10 times book on their way to a PE of about 80% of their long term growth rate. In some bear market some of the groth stock never get fully decimated. I for one, do not think that MRK will breach 75 at the bottom of this bear market and this will be 17 times expected earnings for that year (about 4.5 or so). The last time I bought MRK (during the health care scare of our Lady Clinton), it reached a lousy PE of 10, and I still bout at a good 25% premium to that bottom just under 30 (scarry it was, but what a deal). Zeev