To: posthumousone who wrote (2283 ) 2/26/1998 3:13:00 PM From: Mike M2 Respond to
Gary, you raise many issues some of which I will address for now because it is difficult to cover it all concisely. Later I will post some links to article which have influenced my thinking. 1987 one major difference is valuations P/E, BV ,dividend yield, mkt cap as a % of GDP clearly show a market which is much more overvalued than in 1987. Another factor is public participation is greater-who is left to perpetuate the trend now that virtually everbody is in the mkt -to whom will they sell. Here are a few links for valuation # lfcity.com fiendbear.com Another factor is debt levels are much higher home.att.net Another interesting read is investmentrarities.com I have found many useful articles at gold-eagle.com You can appreciate that as the market rises higher the steady flow of boomer money has less impact to quote John K. Galbraith "sometime, sooner or later,confidence in the short-run reality of increasing stock prices would weaken. When this happened, some people would sell , and this would destroy the reality of increasing values. Holding for an increase would become meaningless; the new reality would be falling prices. There would be a rush pell mell, to unload. This was the way past speculative orgies had ended . it was the way the end came in 1929. it is the way speculation will end in the future. " JKG "The Great Crash" pp 174-5 . trading curbs can only slow the decline but cannot stop it. Derivatives have probably helped the mkt go higher but will one day cause it to go lower than would be otherwise. there is an unbelievable amount of leverage out there- the carry trade, loan securitization, bank repos. Have to go. if you like i will post more links that I feel support the bearish position. I expect a minimum of 50% decline from the eventually top. mike
