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

To: Cynic 2005 who wrote (11346)	12/13/1997 10:27:00 AM
From: Tommaso	Respond to of 18056

Here's a link that provides the most comprehensive analysis of markets with reference to gold prices that I have seen anywhere. There's also a lot of stock-market and interest-rate analysis. geocities.com (Please excuse if already posted) "In 1982, as interest rates, crude oil, and commodities were finally declining from cyclical highs,investors were bailing out of mutual funds at a record rate, convinced that stocks were "stupid" (they had lost three-quarters of their real value in the previous 16 years). Money surged into bank CDs,money markets, and hard assets. Today, as interest rates, crude oil, and commodities are finally rising from cyclical lows, investors are pouring into mutual funds at a record rate, convinced thatstocks are "the place to be". Money is surging out of bank CDs, money markets, and hard assets. Investors are truly inveterate followers of the thundering herd. Assuming that profits and dividends of U.S. corporations continue to grow at the same average rate that they have grown for the past thirty years, or even one hundred years, the stock market will decline by 79% by the next bear market bottom assuming that the dividend yield at that point is 7.5%, the U.S. historic average. If one assumes that this will occur between the years 2000 and 2010, it would imply an inflation-adjusted decline of between 90% and 95%. Should the dividend yield exceed 7.5%, which it is likely to do since panic bottoms often follow euphoric tops, the drop could reach 97%. (Note to skeptics: The Hong Kong stock market declined by 97% during the 1973-1974 bear market, and in past post-euphoric eras, a 97% fall was not unusual for markets as well established as London, Paris, and Amsterdam.) Those who have been following developments in third world bourses may have noticed that several of them have declined by more than two thirds (in U.S. dollars) in just a few months, in spite of their economies having a higher GDP growth rate than the U.S. economy, and with no significant political or economic crises that "caused" these huge falls other than blatant historic overvaluation. It has been a wild party, and the stock market a most gracious and generous host, but it's time to go home before you are trampled by the herd rushing to leave. " That ought to satisfy the bear in anyone!