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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: RWS who wrote (19972)	6/8/1998 3:26:00 AM
From: paulmcg0	Read Replies (1) \| Respond to of 94695

[The next bear market may be the longest and shallowest on record] It is very difficult to predict what the stock market will do, particularly over longer terms. The current prices for a lot of stocks represent some sort of shared mass hallucination. There is no guarantee that stocks will be able to hold on to their current valuations. Heck, there's no guarantee that a lot of these companies will even exist in 10 to 20 years when the Baby Boomers go to retire, because of rapid technological change and market changes. A lot of the "buy and hold" crowd may find their retirement involves eating Alpo dog food while living in a cardboard shack, instead of caviar on the beach in Miami, because they bought Yahoo when it was 129 dollars a share for their IRAs. If anyone doesn't think favored stocks can decline sharply because of the company's obsolescence, they should consider the case of Novell, now (a has-been) and 10 years ago (booming). The further out you look, the harder it is to predict the future, but that's what people are betting they can do when they pay very high prices for a stock now, on the hope that its price will continue to increase. When private companies buy another company, they usually pay 2-3 times the other company's annual sales, unless there are a lot of tangible assets involved. If you consider the market capitalization for a share to be the price people are willing to pay for a company, you see the most astounding things -- for example, at one point, the market cap was equal to almost a century of current sales for Yahoo. Whatever happened to the space colonies that were supposed to have been built by now, according to predictions in the 1950s and 1960s? On the other hand, who could have predicted the rapid growth of the Internet? The future will not be quite like it was predicted to be, but that never deterred the common American investor. Paul M.