To: Tommaso who wrote (1092 ) 1/18/1998 7:15:00 PM From: Jack Clarke Read Replies (4) | Respond to
Tommaso,By the way, the consesnus in the Barron's discussion (though I did not try to tabulate it numerically) seemed Felix Zulauf: We have been dancing on a volcano for quite a while and now it has started to erupt.Oscar Schafer: We are going to have a very tough time in the economy and in the stock market.Carlene Ziegler : I don't know if it's easy money, tax cuts, or more government spending. But the best way to get out of the crisis is just spend our way out.John Neff : ...our market really has its neck out. Here we are at 22 times earnings, a 1.6% yield, and there isn't going to be any earnings growth in the new year. There isn't going to be earnings growth.Jim Rogers : Mario, in 1973 the US was a creditor nation by a gigantic amount. Now we are the world's largest debtor nation. Who is going to bail us out?John Neff : ...we coped in the 1970s, but the market wasn't at 22 times earnings. What I'm afraid of is that we're going to cope this time by marking that 22 down to 14.8 or so.Scott Black : The market ... is pretty expensive. It's about 21 times earnings, four times book, a 1.4% yield. I always laugh when I read bullish analysts saying that there's a new paradigm. ...David Dodd had the funniest rejoiner (sic ) to the new paradigm -- that the four most dangerous words in investing are "this time it's different." It's not. The market, homogeneously, is overpriced.Archie MacAllaster: ...sometime in '98 the stock market will have a good 15%-20% correction.Marc Perkins : Yet, still built into this market is an expectation that earnings just continue to grow virtually forever at 10%a uear. It isn't going to happen.Zulauf : The liklihood of a recession is rising in the US.... What is decisive is that it's going to surprise on the downside; the effect it will have on profits -- and what that will do to the stock market.Perkins : ...my guess is that this bear market will last several years. The range this time, I'd guess, will be 4000 - 7500 -- then it will break out into a brand new bull market.Mario Gabelli : The wild card is what the individual investor does when he has return of capital on his mind, as opposed to return on capital. That sounds trite. But will billions flow out of the funds, as we saw in the bond market in 1994? Who knows?Neff : Chrysler...outlook that is kind of hard to fathom for the next 6-18 months. Yet we sold 100-year bonds, at 75 basis points over Treasuries! How in the hell, if you can't look out 18 months, do you look out 100 years?Barton Biggs : This is the pricking of a major bubble (Asia), but my view is that the stock and currency bear markets are just about over....the US and Europe really haven't gotten hit yet. And they are going to get hit. You are going to get a major hit on the world banking system from bad loans.Biggs : There's no question about it, they don't have enough money...the IMF and the Treasury have decided they are going to build a firewall around Korea....If we are lucky, we'll have just a normal, garden variety, cyclical bear market. A decline of 20%-30% from the peaks. If we're unlucky, we'll have a secular bear.Biggs : Right, like in 1973-74.
