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To: Joseph G. who wrote (7549)	10/3/1998 11:56:00 PM
From: Defrocked	Read Replies (6) \| Respond to of 86076

Off topic...philosophical musings. JG, often upon studying the crash of 1929 I've wondered about who bought the rallies and why. In observing Friday's action it finally dawned on me ,like watching through a distant mirror. Similar to "investors" buying on 10/2/98, in the 30's doomed bulls were "convinced" it couldn't go lower and also bought unconcerned about the changing earnings' landscape. PE's were still historically high, commodity prices were dropping, earnings warnings were accumulating, credit risk was increasing and policy mistakes were being initiated. Yet "investors" operated on the greater fool premise. Now I sincerely hope a repeat of the 30's will not happen. But to bet heavily that it cannot happen is imprudent IMO. Moreover, SP500 P/E's are still at 23.5, very,very high historically as you well know. How far can the market rally from here given the undiscovered risks and potential for further earnings erosion??? IMO the odds of a US recession are around 40%. While I've always felt a '29-type depression implausible, I'd attach odds of a lingering, four-quarter recession, in other words, a depression , at 5 to 10%. That leaves growth prospects for Q4'98 to Q4'99 at just 50/50 and no justification for current market P/E's. Am I too bearish??? Possibly as a result of Friday's "existential" observance of 1929 bullish behavior, I dreamt( honestly I'm not making this up) last night of my currently affluent neighborhood lined with unemployed and panhandlers. Once you consider a depression plausible, your spending declines. Most experienced, professional investors I know are still on the sidelines in bonds and are content to wait until P/E's decline to historic norms or lower before returning to equities. BTW I know you saw the following link, which if you recheck the replies you'll notice I've attempted to verify credibility and date. Message 5897080 But did you also see that several Japanese companies, Pioneer Electronics, Matsushita Electric, Eisai (pharmaceuticals) and Komatsu (construction), (all strong representatives of their different industries) issued earnings warnings Friday? Several of these announcements came after the weak close for the Nikkei which again was being supported using public funds. IMHO, the Nikkei won't hold 13,000 next week. BWDIK. I'm just a cautious investor having bad dreams lately.<g>