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To: Enigma who wrote (22970)	11/14/1998 5:49:00 PM
From: John Mansfield	Respond to of 117026

'It is extremely rare for a Federal Reserve Chairman to warn investors about the stock market. This has happened only twice before in this century (1929, 1965), and in both cases, a severe bear market followed that required more than twenty years to breakeven after inflation. Alan Greenspan chooses his words very carefully. Yet Greenspan referred to the stock market as "a bubble" in a prepared speech when the Dow was about 6000. Only in a bubble can a stock like At Home Corporation be worth $2 billion on its first day of trading when it posted revenue of only $2 million and lost $23 million for its previous six months. Slow-growing companies like Procter & Gamble and Coca-Cola are posting sales growth of 4% and 2%, respectively, yet are selling at 31 and 41 times earnings. Normally, the P/E's of stocks sell closer to their growth rates. These companies have been posting earnings growth slightly faster than sales, but not by much, and this never lasts forever. In the 1960's, people justified paying-up for great companies that would continue to grow, but look at their market returns from 1973-74 - (Coca-Cola -70%, Walt Disney Co -85%, PepsiCo -67%). ... prudentopinion.com