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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: MrGreenJeans who wrote (5942)	7/14/1998 8:52:00 PM
From: wooden ships	Read Replies (2) \| Respond to of 42834

Mr. GreenJeans: Thank you for those timely numbers. If memory serves, Brinker has opined that he can not dream up any scenario which will carry the S&P 500 index over 30 times earnings. With this in mind, let us therefore presume, for the sake of discussion, that 30 times earnings could represent the ultimate top for this market. Using the projected 1998 earnings of $50 given in your post, a rise to 1500 on the S&P from present 1177.58 cum 23.55 times earnings would be required to fulfill that "impossible dream" for 1998. Such a scenario would entail a further 27% rise in the S&P 500 from current levels. Assuming the figure of $52.50 appertaining to 1999 earnings, thirty times earnings would carry the S&P 500 to 1575, or a 34% increase from the current index price. Given the mania afflicting this market, especially in certain sectors, the floodtide of safe haven money pouring in from overseas, the clock- work pension fund money flows, low inflation, modest oil prices, low unemployment, a capital gains friendly Congress, the lowest US 30 year bond rate in history, the dearth of other highly liquid invest- ment vehicles, a relatively sanguine corporate earnings environment, a federal budget deficit(Social Security accounting gimmickry with- standing) seemingly tamed by a Republican inspired slowing of gov- ernment spending not to mention a capital gains tax bonanza flooding the Treasury, the freight train type momentum of many American driven information age technologies now sweeping the globe, et cetera, who, other than Brinker's vaunted "Energizer Bunny," can tell how much farther toward 30 times earnings on the S&P 500 this market can go? One thing seems fairly certain, in any case. At these Everest-like levels of the market, Buffett's wry admonition that "the market will be fine as long as there are no mistakes or surpises along the way" is well taken. As for myself, not gifted with the wisdom of a Solomon or a Buffett nor bestowed with the oracular genius of a Nostradamus, I remain confident that Mr. Brinker and his Marketimer model will detect the nigh inaudible strains of the legendary Fat Lady well before the multitudes have been served up the full complement of her explosive albeit doleful tune.

To: MrGreenJeans who wrote (5942)	7/14/1998 8:53:00 PM
From: Investor2	Read Replies (1) \| Respond to of 42834

Re: "Anyone share my concerns?" [about high valuation of S&P 500] I'm continuing to lighten up on my equity holdings. I just sold a "dear old friend" large cap stock this week to bring my equity allocation to 70%. As the market continues to move up, I will continue to sell off my "overvalued" large cap stocks to maintain or slightly reduce my equity allocation. I'll also have to start liquidating European mutual fund shares to keep the U.S./International equity balance, if the European market keeps moving up. Best wishes, I2