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Technology Stocks : Winstar Comm. (WCII) -- Ignore unavailable to you. Want to Upgrade?

To: dougjn who wrote (8640)	10/9/1998 8:49:00 PM
From: Bernard Levy	Read Replies (1) \| Respond to of 12468

Hi Doug Three points: a) First your 25% decline figure based on the average SP P/E in past WW2 years ifs highly artificial since these years contain many period of high inflation (early 50s, late 60s to mid 80s) for which P/Es were very low. If you look only at low inflation periods (late 50s, early 60s), the current P/Es are extremely reasonable, if not cheap, unless we are at the start of a big recession. b) I would not let the free market rhetoric of the current era fool you. The entire apparatus of the post WW2 welfare state is stronger than ever. This state came about to make sure the great Depression would never reoccur, and if you scratch the surface below the free market rhetoric, you find Keynesianism everywhere. Through government spending, tax cuts, political pressure for interest rate cuts, inflation is the state of affairs that comes the easiest to our system. It takes major policy blunders (such as the Japanese tax hike at the beginning of a recession last year) to create deflation. In fact, I even think deflation is impossible in the US and European economies. There are too many countercyclical programs (unemployment insurance, etc...) that kick into high gear as soon as we are enter a recession. c) Regarding limtex's comments about this being the worse bear market ever. This statement is so ridiculous,it is not even worth responding to. Worse bear markets would include not only 29, but also 73-74, and even 87! Only the 90 bear market was milder. Besides, the unemployment rate in the 30s reached 25% It is not only 4,6%. Even if we enter a recession, I have not heard a single person indicate unemployment could go beyond 7 or 8% Best regards, Bernard Levy PS: If I had to make a guess, I would say we are very close to the bottom. The semiconductor stocks, which have been in a horrible funk for about a year are starting to show some signs of relative strength.

To: dougjn who wrote (8640)	10/12/1998 7:31:00 AM
From: limtex	Read Replies (1) \| Respond to of 12468

Dear Dougjn - Your reasoned arguments are very strong but just imagine what would happen if you put the P/E excercise on a spread sheet and THEN factored in a recession?!!!! Actually I just cannot bring myself to believe that the S&P could drop another 25% or in fact drop below 900. Ask me why? I just can't give you a reasoned argument. It just doesn't feel like it now. Maybe it has to do with that there are more investors out there and that there would need to be a lot more stock to be sold by people but thepeople won't do that because they will just hang on even for years in the knowledge that after a time the stock will recover. I think that is the main difference between now and 1929 a lot more people have an interest to stay clam and not sell because their retirements are tied to the market. Put another way maybe the individual retirement investor is a lot tougher and more calm and stable than the leveraged funds and the institutions!!! The other big thing is confidence. A week of solid gains by wolrd markets could change everything by reinstalling confidence. So much do we all want to say 'OK its over no more down and we'll start building back form here'; and then the sun will come out again and we will realize that we weren't in a 1929 situation. Now this is unscientific emotion but maybe thats what got us up to 9,300 and droppped us from it so maybe it'll clam it all down as well. The unmeasurable human emotion of confidence is a very big influence on P/E's!!! Regards, L