To: OldAIMGuy who wrote (5137 ) 7/22/1998 9:17:00 AM From: JZGalt Read Replies (2) | Respond to
Tom, actually the graph and the p/e component question are tied together. I started to worry about the continued expansion of the p/e component in the S&P back in March, but when I dug down into the reasoning, I came away feeling that the MSFT's, DELL's and CSCO's of the world were distorting the numbers as well as having the drugs return to slightly above normal valuation levels (with below normal growth rates) and the continued expansion of the p/e multiples in the banking sector. These are not insignificant components as the S&P500 has been moved quite a bit from a core of industrial giants in the mid-late 1960's. Consequently historic analogies to "where we got into trouble before" are difficult.A: We're long crude oil. Went long about a dollar ago. But most speculators are short -- and probably will be until we get back up to the $15-$16 area. I'm making the bet because I can't find a place, in any market, on any chart, where speculator sentiment has been above 90%-95% in one direction where betting against their position hasn't been the right thing to do.
