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To: hdl who wrote (108587)	3/9/1999 2:34:00 PM
From: stockman_scott	Respond to of 176387

<<I bet wrongly momentum would turn about two years ago.>> Sorry about that. IMHO, it is crazy to try to bet against the market right now. I recommend that you read a new book called "The Roaring 2000s" -- by Harry Dent, Jr. .....Mr. Dent is a VERY sharp businessman, consultant, and forecaster. He considers major trends and drivers in our economy. In his book he contends that the DOW could be as high as 35,000 by the year 2008. He also recommends investing in "premium high tech companies" (near the top of his list is DELL). Mr. Dent feels that DELL is the true pioneer in direct producer-to-consumer selling. He has a brief profile of their model in his book. Good Luck with your investing decisions. Regards, Scott

To: hdl who wrote (108587)	3/9/1999 3:05:00 PM
From: Chuzzlewit	Read Replies (4) \| Respond to of 176387

hdl, Your argument is partially correct but inferences are wrong. You argue that when markets move down stocks contained in various indices move down. True. But then you would have us believe that the mere inclusion of a stock in an index makes it more vulnerable than the market as a whole. False and misleading. Let me explain. Volatility is generally measured by beta, which is a roughly ratio of the expected movement in a stock's price vs. the market as a whole. I know there are problems in both the use and the estimation, but you are suggesting an additional tier volatility. The problem with your inference is that market risk is entirely subsumed by beta, which in fact uses an index, the S&P500, as a baseline. The corrollary of your argument is that one ought never to invest in stocks that are contained in indexes when the market is rising. No S&P, no DJIA, no NASD100, no Wilshire. In fact, no stocks at all, because virtually all stocks are represented in one index or another. Your argument really boils down to not investing when you believe the market is overvalued. You are really saying buy low (in absolute terms) and sell high (in absolute terms). Those absolute terms depend on estimates of valuation. But economics teaches us valuation is that which a willing buyer and a willing seller agree. From where do we get those absolutes? Here is an example: Gold is worth very little to me. Not only would I not pay $300 oz., I wouldn't pay $100 per oz. Gold is almost always overvalued. It generates no cash flow and has very limited industrial uses. The only reason that gold sells for $300 is that a bunch of lunatics agree that it should, because these same lunatics have agreed that gold is useful if currencies become devalued, because some other lunatics from years past told the it was a good hedge against inflation. So what hedged you against inflation to the tune of $700 per oz. 15 years ago is now worth only $300. Some hedge! Some absolute! TTFN, CTC