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To: Lucretius who wrote (20077)	4/22/1998 10:58:00 PM
From: drsvelte	Read Replies (1) \| Respond to of 95453

"and interest rates begin rising dramatically as inflation , rumored to be dead, is alive and kicking a in a very foul mood. (basically a return to the 70's.. no bell bottoms rq'd )" LT -- fascinating speculation, but I'd like to know what motivates your thinking on this! The '90's are hardly the '70's in many fundamental respects.

To: Lucretius who wrote (20077)	4/23/1998 12:12:00 PM
From: 007	Read Replies (2) \| Respond to of 95453

LT, I agree with your doom and gloom forecast as it always occurs when markets get this high. There are many signs that tells us that we're in the kind of market that precedes a dramatic bear market. However, timing the top is very difficult. We may be at the top now or we may have another year of outstanding gains to go. The market is due for a 700 point correction, and then it will likely start another big move upward. This should continue until inflation appears and interest rates need to be raised. I don't see it now, but it could begin at any time. As for this sector, moves downward in the market will focus attention on commodity prices. If crude is firm or rising, we should do fine. I would only be worried in the near-term if we were oversold and crude started dropping at the time the market began to correct. In this scenario, we could plummet very quickly and I would probably go to cash, otherwise a correction doesn't concern me. This sector is getting stronger all the time and I agree that it isn't wise to try to time the dips anymore unless these circumstances combine to make a substantial drop likely. 007 PS The Teddy View: If crude goes down, we're doomed. If crude remains stable, e & p budgets based on expectations of higher crude prices will be slashed, we're doomed. If crude goes up, corporate earnings drop, inflation rises, interest rates rise, crude demand falls, the market crashes, we're doomed.

To: Lucretius who wrote (20077)	4/24/1998 11:23:00 AM
From: edward miller	Respond to of 95453

Lucretius, Re: Apr 22 post at 8:24PM EST I don't see the parallels to the '70s, having invested in it. Specifically, oil is not the same. The oil cartel drove prices in the '70s and there is no effective cartel today. This won't happen until both 1) oil demand exceeds all world production, and 2) everyone knows it. I think this is ten years away, if not more. The Japanese need to sell bonds, and that will drive the 30-year bond rates. Higher interest rates will squeeze businesses which are already squeezing every drop of blood from their operations now to maximize profits - and they are running out of steam and have no place to turn at this point. No new accounting tricks, no new cutbacks on their employees backs because we are in a labor shortage in skilled workers. I speak from my opinion of the technology business here, so things may be much different elsewhere. With that caveat, I feel that today EVERYONE knows that company loyalty is pure crap (company loyalty to employees, so employees are finally getting smart). This means that increasing interest rates fall straight to the bottom line. In companies already stretching their employees as thinly as possible to cover their business any layoffs to reduce costs will backfire because that causes a loss of 1) business opportunity and 2) their pitch of company growth to investors. Stock prices will drop under these conditions. Thus the world would go into recession and oil demand will drop. Under this scenario the price driller stocks will die along with the rest of the market. P&E cutbacks will happen if this occurs. Uncertainty will drive gold off its lows - how high I have not a clue. What concerns me most is a suspicion that Asia is so totally broke that nobody wants to even talk about it, but the truth will eventually come out. From what I've read business to companies in Asia is down sharply. If Japan wakes up and starts doing the right things to turn around then I see the baby boomer's relentless savings for retirement as continuing to escalation of stock prices until they start taking serious money out. There are a lot of things that can drive people into doing wacky things, and we may be entering a "wacky era". Ed Miller