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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (8000)	2/12/1999 1:19:00 PM
From: Bosco	Respond to of 9980

G'day all - Paul & Zeev, while it is a good thing to have advocacy groups like AFR editorial, I am not sure how big a bomb this is: insidechina.com On this so called historical day here in the US, the sound & the fury seems to ring louder on the editorial pages than in the main street. Obviously, most of us have seen the writing on the wall weeks, if not months ago. But enough digression. Remember back a month or so ago when China executed a few hoodhums [who kidnapped the wealthy Hong Kongese. They did it to Li Ka-shing's son twice!] HK authority put up a weak protest, but, everyone was happy to get rid of the mess. Before the changeover, China also did a sham election of HK legislative council. So long as the conglomerates are protected, money will flow. Am I being cynical? Not really. While I try to be pragmatic, I think if these international bleedhearts are truly concerned, they are talk about the real things, be it Tibet, Kosovo or what have you. best, Bosco

To: Zeev Hed who wrote (8000)	2/14/1999 8:55:00 AM
From: MikeM54321	Read Replies (1) \| Respond to of 9980

Re: Is it a bubble? Thread, There was an interesting online debate last week between the bear, Bill Fleckenstein (Stocksite.com) vs. the bull, Dave Kansas (Street.com). It's a little hard to find on Microsoft's Slate Magazine site. Here is a link to it that I hope works: slate.com When you hit the site, you can start the debate by hitting the next message >> button at the lower right. I found the most compelling bear argument for the, "It's a Bubble," camp to be one of an, "earnings," problem. IMHO, Dave Kansas really never made a strong counterpoint to the earnings problem Bill Fleckenstien brings up. Dave's only argument seems to simply say, "Well earnings are up consistently, albeit, a small amount. And we may have a bear market, but it won't be a bubble bursting." IMHO, it is hard to justify the spectacular rise of the stock market versus the mediocre earnings rise. But that doesn't mean a thing about where I think we are heading. I just do not know, but am remaining somewhat cautious. Here's a few excerpts. But the full debate made a lot of other points and counterpoints. Some regarding Asia, Japan, etc. Topics of direct interest to this thread. MikeM(From Florida) -------------------------- Fleckenstein: But I say, "Show me the earnings." As I cited yesterday, since the end of 1996 basically there's been no earnings growth and the market's up 70 percent. And since the end of 1994, earnings are up a total of 29 percent and the market's up 177 percent. So I think that tends to make the argument that this is all about speculation rather than investing. Kansas: A short one today, but an important one. Let's tackle one of Bill's central arguments: Show me the earnings. That is always the big stickler when it comes to this bull market run. As Bill effectively points out, the gain in stock prices overall has outstripped the gains in earnings over the same period..... I think it is fair to say that valuations are anticipating that the rare confluence of positive events that are supporting stock prices will continue for some time to come.....The fundamental underpinnings of this market run--solid earnings growth, benign inflation, and continued productivity gains--argue that the stock market has not lost track of its senses. Fleckenstein: Let's be clear about one thing. Dave states that I'm arguing that growth is anemic and he argues that growth has continued--but there's no reason to argue. We can look at facts. As I stated before, since the end of 1996 S&P earnings are going to be up about 2 percent, based on estimates for 1998 year-end earnings of about $39.50. In that time the S&P 500 has been up 69 percent. Meanwhile, since the end of 1994 earnings are up 29 percent, while in that same period the market's up 177 percent....So those are the facts. We can call them anemic, we can call them growth, but the fact is that for the last couple of years there has been no earnings growth, while the stock market is up basically 70 percent. Kansas: Already having outlined the fundamental differences between the U.S. now and Japan then, I will wade back into the issue at the core of the Fleckenstein bubble case. Earnings. He argues that earnings growth is nonexistent and therefore stock values have soared to bubblelike levels on little more than hot air. According to my figures, 1998 was not a great year for earnings growth. The S&P 500 aggregate earnings per share rose from $44.74 to $44.87. That's not a wild jump. At the same time, stock prices moved up about 25 percent, as measured by the S&P 500.... Again, the issue at hand is not so much the pace of earnings growth, but the durability of that expansion. Fleckenstein: I think it's a little disingenuous to try to support the fact that earnings weren't that great last year by arguing that, well, the price of oil collapsed and therefore oil companies didn't benefit.....Only time will tell whether or not it's a bubble, but one thing's for sure: If it is a bubble, the only safe time to get out would have been too soon, because after it's too late--it's too late.