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To: VICTORIA GATE, MD who wrote (63827)	9/5/1998 2:18:00 PM
From: jim kelley	Read Replies (1) \| Respond to of 176387

Victoria Gate, Greenspan DID NOT SAY that the stock market values are chiefly determined by psychological forces. He did say that the market is heavily influenced by swings in investor confidence BUT that the fundamental value of a company is determined by the investors perception of the present value of the future production of good and services from the business ( prospective fundamentals) He stated that the evidence over the centuries is that the valuation of a company moves to its fundamental value. This value is not ultimately determined by swings in investor confidence. Thus in the short term, investor confidence is important but over the longer term a company's fundamental performance and prospects are the determining factors. If you are a short term trader you will want to pay attention to the mood swings of the market. If you are a long term investor you will want to calculate the future fundamental prospects of the company in your choice to invest and hold a stock. Remember mood swings can be very abrupt and the turn arounds can be just as abrupt. Timing in this kind of environment is a very risky skill. Many day traders go bust. Jim Kelley