Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Zeev Hed who wrote (13088)	1/14/1998 12:46:00 PM
From: Kid Rock	Read Replies (1) \| Respond to of 18056

I'm seeing gasoline prices of .88 cents? I dont remember gas this low since the seventies. What "macro" effect does gas/petroleum play on the Dow, if any? Tom

To: Zeev Hed who wrote (13088)	1/14/1998 1:00:00 PM
From: studdog	Read Replies (1) \| Respond to of 18056

Zeev: I agree with your thoughts on valuation. We are currently not so screamingly overvalued as many feel. I went through the exersize of figuring out "fair value" with the Fed model last week on this thread, and based on earnings expectations and interest rates, we are right at fair value. I don't buy the premise that the market is propped up by liquidity and yuppie buyers either. It is earnings and interest rate driven at this time and has been for the last three years. If earnings expectations really fall, and/or interest rates really rise, then the market will fall. Daily and weekly noise may come from money flows but the overall direction of the market is dependent on those two things, and has followed them pretty closely over the last few years. We were as much as 25% "overvalued" in the fall, but the rapid drop in interest rates brought us back to fair value. Presumably the market was anticipating the move, as well as the inexorable, but slowing, rise in earnings. The question is not whether we are overvalued now, but whether interest rates are going to rise or fall or earnings expectations are going to rise or fall. We don't have a valuation problem currently. My own expectations are for a slight rise in interest rates, and a slight fall in earnings estimates. This suggests sideways to down for the overall market. I do think many of the small caps are undervalued currently and have most of my money there. I have covered most of my SPY shorts though. FWIW Karl