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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: GROUND ZERO™ who wrote (12022)	12/21/1997 2:02:00 PM
From: Brad Bolen	Read Replies (3) \| Respond to of 94695

RE: All this having been said, there is such great bearish sentiment floating around these days that there is the temptation to abandon one's reliable indicators for prevailing emotions. I have seen a score of statements such as this lately. This implies something that I am not comfortable with: that either a) earnings are going to be revised upwards in 98 or b) that investors will continue to bid up stocks to higher PE's. as for a) do you really think earnings from here will be revised up? Recent complaints from market strategists are that analysts are revising earnings downward too slowly. I have browsed an ocean of Zacks estimates and can see where many stocks that should have been downgraded as a result of the Asian crisis have remained unchanged for weeks. as for b) the only argument I can see for higher PE's is that bond yields drop significantly from here. Though I think they will drop further than a majority of analysts have suggested in 98-99, I can't see them falling far enough or slowly enough to provide a rational foundation for equities to proceed in an 'orderly' bull. That is, an excessively rapid drop in interest rates is also bearish--witness the claims and fears of 'deflation'. This seems like a no brainer to me. (which in my case, may be a good thing) It doesn't help to be a contrarian if the majority is right. B.