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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (710)	9/1/1998 6:31:00 PM
From: Freedom Fighter	Respond to of 1722

>>>Stephen Roach: "Is Global Collapse at Hand?" I agree with him on almost everything!

To: porcupine --''''> who wrote (710)	9/1/1998 7:13:00 PM
From: Freedom Fighter	Read Replies (2) \| Respond to of 1722

Reynolds, Abby vs. Byron I'm not sure I agree with you that debate on valuation has been between Abby and Byron. (If I understood you correctly) Both have been very bullish throughout most of the recent past. They only parted ways very recently. They also use a very similar valuation model. They both use what can best be called a Free Cash Flow or Dividend Discount Model very similar to CAPM or the standard valuation model on "The Street" and in finance. The one noteworthy difference being that their inputs are what can best be described at snapshot inputs instead of normalized inputs. Most finance books that teach CAPM or related models are very clear that normalized inputs should be used. They also use much higher risk premiums than I believe either Abby or Byron use. I think your perception that they are the key players comes from the fact that they get all the press. To me, the real debate is between Wall ST. and a bunch of stodgy "old school" billionaires. Warren Buffett has been a net seller of stocks since last year for only the second time in his life. Including a massive indirect sale through his purchase of General Re this year. Lawrence Tisch has a multi-billion dollar short position for only the 3rd time in his life (87 US and Japan 89 the other two). (Which is looking a little better these days) Joe Steinberg, who has a 20 year record that equals Warren's, has cashed in almost everything. This is unprecedented. He and his partner are quoted as saying "One of us thinks this is going to end very very badly and the other does not know what to think". (other than prices are unprecedented) John Templeton has exited the U.S. At 6400 he said prices were extremely high. Recently he said the U.S. looks like Tulipmania. George Soros at 6400 said, "I think Alan Greenspan has the right idea. I do not think we are yet at levels that make a serious crash inevitable, but I could be wrong". Recently, off the record, I was told he said (paraphrase) "The U.S. is in a bubble. It is well recognized as such by many people now. It can therefore now be pricked" (This was about 2 weeks ago.) Philip Caret at 6400 said "The public is pretty well in now. I don't foresee a depression or anything though". I know of one other billionaire family that is running their money fully hedged. Something they don't normally do. I know one money manager with a net worth of several hundred million who thinks that what has been going on is totally nuts and is patiently hoping for an opportunity. John Ruane has been reported to be selling for the first time ever and putting all dividend and interest payments into treasuries. Time will tell who is right. We won't know what the value of the businesses people have been buying for the last 2 years was for 5 or 10 years. You know my view on this. It's the 27 Yankees vs. a couple of salaried analysts that work for firms whose job it is to sell stocks to the public and do deals. I'm not sure who's going to be right, but I'll bet on the Yankees if I can get even money!