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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Kip518 who wrote (13505)	9/5/1998 9:44:00 PM
From: Market Tracker	Read Replies (2) \| Respond to of 18691

An excerpt from today's "Heard on the Street" "Those fascinating charts on the preceding page were fashioned by our favorite data demon, Jim Bianco, of the imaginatively named Bianco Research. What they show in Jim's stark but eloquent words is: how much wealth the stock market has destroyed. In August alone, he points out, the market's loss, as measured by the S&P 500, was over 14%, the biggest monthly decline since the 21.5% drop in October 1987. As measured by the Wilshire 5000 Index, $2.3 trillion was wiped out last month, and the total capitalization of the market fell more than 20% from the July 17 peak. emphasis mine. Jim also addresses the question, How have mutual-fund shareholders fared? Far worse, as the charts suggest, than the averages. Since the start of the big bull move, in October 1990, investors have put a cool $1.06 trillion into domestic equity funds -- that's nearly 90%, he notes, of all the money invested in mutual funds since they were created in 1924. At the May 1998 highs, these investors had unrealized profits of $647 billion, or an appreciation on their investment of 61%. When the Dow Industrials sagged to 7539, this grand pile of dough melted by 43%, he figures. He calculates the extent of the meltdown by using the investors' average Dow Jones Industrials purchase price since October 1990. From a break-even standpoint, the average of all domestic equity purchases since October '90, according to Jim, is 5474 on the Dow. (The S&P 500 equivalent is 635.) The level at which the average mutual-fund investor would be underwater thus is less than 18% below where the market currently stands; put another way, the comfort margin of the average fund investor has shrunk dramatically in only two months."