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To: jach who wrote (18262)	10/17/1998 9:40:00 PM
From: Clint Todish	Read Replies (1) \| Respond to of 77397

Sounds like Jach's playing his broken records again. He must have decided to take another short position. Please don't make us listen to it again. thanks. -C

To: jach who wrote (18262)	10/18/1998 12:35:00 PM
From: jach	Respond to of 77397

-Up or Down, something to think about - OT Sunday October 18 12:33 AM EDT Bulls Charge But Does Bear Trap Await? By Pierre Belec NEW YORK (Reuters) - Is this a tough stock market, or what? Wall Street is just coming off one of its worst beatings in decades, but the market won't stay down. Smart, punch drunk or just stupid? Some experts say the market's moonshot recovery is not sustainable. For the week, the Dow Jones industrial average was up 517.24 points at 8,416.76. The Nasdaq composite index was up 128.45 at 1,620.95. The Standard & Poor's 500 index rose 72.10 to 1,056.42. Even the surprise move by the Federal Reserve to cut interest rates for the second time in less than a month did not dramatically change things -- though it may have diverted attention from the 11th anniversary Monday of the 1987 stock market crash. The cuts in interest rates, which came out of left field and sent stocks soaring, merely underscored the seriousness of the problems facing the global economy, as well as the need for quick action to control the damage to the United States, analysts said. ''Nothing has changed significantly in the global economic environment since the market topped out in July and went into a tailspin, and yet, this market is still straight up in the air,'' said Richard Smiley, chief executive officer of Union Bank of California Investment Services. From its record 9,337.97 in mid-July, the Dow Jones industrial average has fallen as much as 1,900 points, bottoming out at 7,400 on Sept. 1. Trading Friday at about 8,400, the Dow is up about 5 percent for the year. Is this the right time for investors to jump back into the stock market? No, says Smiley. Stocks may be more susceptible now than ever before to a major sell-off. ''Markets do not go through that level of decimation and bounce right back,'' he said. ''What will happen when it drops 30 or 40 percent? Then we could get a full scale panic.'' Investors are making knee-jerk reactions to short-term events and they need to take a step back and evaluate the world's economic situation, said Smiley, who heads the San Francisco-based brokerage house unit of Union Bank of California. ''The vulnerability has been increased by the people's ingrained approach to stock investing,'' said Smiley, a 25-year veteran of the securities industry. ''Since 1990, some 90 percent of investment money has gone into mutual funds and those who manage the funds have convinced customers that all they have to do is 'buy and hold' stocks,'' he said. Wall Street is also advising the investors that if 'they snooze, they lose.' In other words, the best strategy is to buy into any corrections, regardless of whether it makes any sense from a fundamental standpoint. Smiley reckoned that investors may have developed a 1929-type market psychology that says stocks can only go higher. The fundamental standpoint? Stocks have shot higher over the last three years on constantly rising earnings. But the earnings story has now changed and analysts are slashing their profit forecasts. Sure, boatloads of low-priced Asian toys and VCRs are arriving to U.S. shores, but the same ships are crossing back empty because the Asians can't afford to buy American products. Analysts say the earnings for the latest quarter will be the poorest in seven years but the price-to-earnings ratio of the Standard & Poor's 500 index stands at 25, twice the historical average. ''A lot of first-time investors should not be in the market because they don't understand risk,'' he said. ''Their expectations of what stocks will do is unrealistic.'' Smiley sees some similarities between today's U.S. market and Japan in 1987. Tokyo stocks were floating through icebergs and it was apparent the market was way over-priced. But Japanese stocks stayed afloat for another two years before sinking. Tokyo's Nikkei stock index has not recovered and hovers at a 12-year low of 13,000 points. ''Even though we have sustained great corrections, the U.S. market has had the ability to go back up again,'' said John Geraghty at North American Equity Services, a consulting firm. ''The reason is that the cash flowing in has been greater than the cash flowing out.'' But the fund story may be souring. For the first time since 1990, investors in August pulled out more money than they put into stock mutual funds. Stock mutual funds reported a net outflow of $11.2 billion in August after an inflow of $19.53 billion in July, the Investment Company Institute said. It was the first net outflow of money from stock funds since a $520 million decline in September 1990. Wall Street may be in a state of denial. There are fewer good earnings out there but investors continue to project into the future the earnings growth of the past few years. Smart, punch drunk or just stupid? Only time will tell.