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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: BGR who wrote (48207)	2/21/1999 7:50:00 PM
From: bill meehan	Read Replies (3) \| Respond to of 132070

It has been. However, it doesn't address valuation. The best time to invest is not when virtually everyone (including foreign investors who despised the US market as recently as 1997 because it was "too expensive") believes that the stock market is a "no brainer". This holds true in all markets, be it fine art, beanie babies or pieces of paper that very few holders understand. When stocks tack-on billions in market cap because they announce splits, it's just another sign that it's time to split. At some point in time, and I believe we are close, greed will inevitably turn into fear. I think the biggest mistake that most who formulate market theories make is to assume that investing is simply an intellectual process. I have found that it is by far a more emotional process, which is difficult (impossible?) to neatly fit into equations. As for many US stocks, Of course one could ignore all the "noise" for decades and still get a decent return. The S&P works well because it is a moving target. That is, losers are dropped and replaced by more attractive companies, so one won't get stuck in a modern day buggy whip company. I'm otimistic that our system will last, and the economy grow, although that runs against history over the very long-term. If the market goes down 50%, anyone invested in the S&P only over the past 4-years will still have a good return. I just think it's better to be aggressive when prices are cheap and have reduced exposure when they are very dear. The primary reason that that's important to the average investor is that many of them will panic and sell when they would otherwise be more rational and perhaps buy if they had cash in reserve. Very few that are fully invested will stay the course. There is little doubt, except on the part of those who think this is the first "New Era", that most stocks, especially the very narrow leadership, are grossly overvalued. That's the most important reality, certainly it's more important that the fact that there's money to burn.

To: BGR who wrote (48207)	2/21/1999 8:16:00 PM
From: yard_man	Read Replies (2) \| Respond to of 132070

BGR, the mantra leaves out corporate purchases of equities and the role of credit in fueling this boom. The market hasn't zoomed simply because we've all got to be better savers, it is the confluence of many serendiptous events and poor decisions made by our central bankers a few years ago. The mantra also leaves out larger concerns about the stock market becoming a more ubiquitous way to save for all folks and all purposes. Also there is the unprecedented willingness of both corporations and individuals to take on additional debt because of feeling richer --- i.e. there a whole host of reasons why the current strong trends could be reversed in a rather non-linear way. Just as markets have melted up -- they can melt down. Be open minded about what can happen ... it can only serve you well.

To: BGR who wrote (48207)	2/21/1999 9:30:00 PM
From: Alias Shrugged	Read Replies (1) \| Respond to of 132070

BGR >>>>Isn't that a rather accurate description of reality?>>> It is a very narrow description of reality. A broader view would note that raging deflation worldwide has resulted in low US inflation and interest rates are low, in part, due to a panicked FED. Taking a broader view leads me to believe investing in US equities is extremely risky at this time. PS - Thanks for posting on this thread - someone has to keep these guys on their toes. -gg- Mike

To: BGR who wrote (48207)	2/21/1999 9:55:00 PM
From: Eggolas Moria	Read Replies (1) \| Respond to of 132070

<< inflation is low, the economy is strong, and baby boomers have no place else to invest their money Isn't that a rather accurate description of reality?>> Two out of three are correct. The first two, to be precise. However, the third leg is a preference, not an absolute. Baby boomers want to invest in stocks right now, but there are other asset classes. Whether or not they are as attractive on an absolute or risk-adjusted basis will depend upon a multitude of factors, including performance, recession, etc. "It's different this time" and "there's no place else to invest" are of similar class. That's not to say that I disagree that the clear preference has been and continues to be equities. It is only to say that external events can change the situation.