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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Robert Graham who wrote (6637)	3/7/1998 1:28:00 PM
From: Chris	Read Replies (4) \| Respond to of 42787

good stuff from MONEY Weekend, March 7-9, 1998 New "wisdom" about an aging bull The latest spurt suggests that investors are taking a surprisingly different view of some old market bugaboos By Michael Brush Forget Intel! Motorola? Ha! To heck with strong job reports that say inflation may bring stock-crunching interest rate hikes! We've got money burning a hole in our retirement portfolios, and we want to buy stocks! That was the mood of the U.S. stock markets heading into the weekend, as investors brushed aside what probably should have been serious challenges and closed higher for the week -- boosted by a 125.06 point gain to 8569.39 on Friday -- despite all the hand wringing that had occurred a few days before. Investors partied despite the recent angst about earnings warnings from Intel (NASDAQ: INTC) and Motorola (NYSE: MOT). They also shrugged off a stronger-than-expected jobs report Friday which suggested an increase in inflation that might make the Fed raise interest rates, or at least back off from an expected easing this spring. And the latest bad news -- from Compaq (NYSE: CPQ), saying it expects first- quarter earnings to fall below expectations -- came only after the ebullient close. What is going on? "You have a bull market, and people are buying on the dips," explains Scott Fullman, the chief options strategist at Swiss American Securities. "There is a lot of money out there that still has to come into the market." Market strategists also say investors have a fresh view of three of the old problems that used to bug them. Here's how that new wisdom -- if, indeed, it proves wise -- might be described: * Asia doesn't matter: "There is still a very high level of conviction that, in time, Asia won't matter," says Hugh Johnson, the market strategist for First Albany Corp. "There is a feeling that the impact on sales and earnings will end, and a more normal recovery will begin." Impact or no, the market is already figuring the fourth quarter of this year into its prices, says Johnson, and by that time the effects of Asia will be over. * Warnings are for companies, not industries: Scudder Kemper Funds chief investment strategist Robert Froelich says the market has "matured" in the way it looks at Asia-related market warnings. "It is accepting that companies will disappoint, but that doesn't mean sectors or the overall market will disappoint. I think warnings are going to be looked at on a company- by-company basis until we understand what the overall effect is going to be." * The Fed is frozen for now: "The new paradigm says the Fed can't move rates even if it wants to," says Froelich. Why is that? Because it does not know whether Asia is good or bad. The slowdown there may shave off just enough growth to reduce the threat of inflation, or so much growth that it really messes things up. Until the Fed knows for sure, it does not want to move for fear of making a mistake. So even signs of too much growth -- like Friday's labor market report -- don't scare the bond market into thinking the Fed will hike interest rates. Meanwhile, stock investors like the strong employment news, cause more jobs mean our consumer-driven economy still has strength. Many pros admit, however, that this week's events left them puzzled. "When you look at what happened yesterday and today, it just seems totally irrational," says Johnson. "What gives?" And we don't want to spoil the party, but it might pay to keep in mind that just as markets can turn irrationally giddy, they can get irrationally gloomy. Will investors really keep looking at earnings warnings on a case-by-case basis? Good question. Thanks to the Compaq announcement, the answers could come as soon as Monday morning.

To: Robert Graham who wrote (6637)	3/8/1998 11:40:00 AM
From: Chris	Respond to of 42787

thank you bob g. for the book reviews.. recently, i've been reading in detail the articles in the S&C magazine.. LOTS of good stuff in each issue i must say. very glad i subscribed. haven't been reading any books lately though.. always busy tinkering and hitting myself for the tech selloff <ggg>