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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Oeconomicus who wrote (9343)	5/29/1998 1:36:00 PM
From: Pancho Villa	Read Replies (1) \| Respond to of 18691

RDB: Excellent analysis. All these are simple models which in general indicate a tremendous market overvaluation. If well it is true that the market will not crash just because these simple but very rational models indicate it is extremely evervalued, when you combine these with other annecdotal evidence like merger mania, brokerage stocks going through the roof, Bank of Boston buying JPS, Gabelli ready for an IPO, flight to junk just to avoid the Asian exposure, you start wondering. The problem is that with the internet and active management we (I) check the market far too often, so a market correction seems to take forever! but quarter by quarter the earnings growth picture will be reflected in stock prices. It was interesting to see GDP growth for Q1 going into inventories. Companies kept production high to absorb fixed costs thus reducing the average production cost per unit but when the sales fail to materialize who cares about having a bunch of inventory at low prices which then needs to be moved out at a discount. JTC, you and I among others have been warning about the Asian crisis and the coming economic slowdown. I linked this to an earnings slow down which would translate into a market fall. Unfortunately, as an economist you know how difficult it is to forecast the economy; well forecasting stock markets moves is about 100X more difficult. I used to subscribe to this belief 100% in the past. The first time I violated it I got wacked! Yet, I am stubbburn an insist downside risk is much higher than upside risk and thus keep a substantial short exposure. Pancho BTW we should declare today the official junk up day: BFT, all internet stocks, ZONA CDRD all up no earnigns but no Asian exposure either. That is a nice and easy stock picking algorithm for money management. Have a good weekend! At least ZITL is down!