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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Terry Maynard who wrote (3878)	4/19/1998 3:27:00 PM
From: Michael Burry	Read Replies (1) \| Respond to of 78462

And she says past indicators of market valuation may be have to be rethought That's what gets me. It's as if every 30-40 years, people judge the generation two generations above them as somehow dumber. The idea is, we're smarter now. Whether it's infotech change, graying demographics, globalization, or portfolio insurance, bull markets create excuses for a populace that wishes to have greater tolerance for higher valuation levels. Yet bear markets happen anyway. Re: a book from a brokerage insider, I can't imagine that it would be bearish. Nothing could be more antagonistic to the brokerage's purpose than a bearish book. Of course, at least she makes the comparison from 42 to 66. I wonder why she didn't bring it all the way up to 71- when the bull really finally started to crack. Is she implying that it's ok because we have a few more years left? The Bear Book has some revealing inflation-adjusted statistics for the "buy and hold" cult. Obviously, if you buy and hold Microsoft early in a bull, no problem. But buying and holding "the next Microsofts" is much more troublesome, even if you aren't dealing with a market that is historically too rich. And the rich markets of the late 60's and late 20's brought >15 years of losses to those that bought and held within two years prior to the peak. It is shockingly revealing to me at least that Disney went from the 60s to 6. But it seems most people today think, "how stupid of those people to not buy it at 6," and hence miss the point entirely. Re: the advance/decline line, I wonder about is usefulness now. When stocks go up because more money is being forced into the market rather than because valuations are attractive, I would expect the A/D line to be more a reactor than a predictor. Re: interest rates, could it be any more perfect? Could the dollar be any stronger? Could the threat of inflation be any less remote? Of course it looks perfect. Stocks are well above the level before the Asian crisis because of this. So should we shoot for 30X earnings - that's only another 10-15% on the market. Or should we prepare for a retracement to 5-10 X earnings, as history shows us can happen soon after perfection is attained? I'm more inclined to do the latter, but of course to each his own. Mike