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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Alastair McIntosh who wrote (17741)	3/18/1999 9:10:00 AM
From: Zeev Hed	Read Replies (2) \| Respond to of 18691

Alastair, I do not think you and I are that far apart, if we breach 8250, then I have another major support about 800 to 1000 Dow points below. The reason I have a low probability for such a deeper retrenchment (actually a bear market) is that the overvaluation is somewhat compensated by excess liquidity in the market. When you have excess liquidity those funds are "forced" to seek less than "fair" valuation or pay more for assets than these are really worth. If we go into a bear market, you will see valuations that are under the model of course, but for that you must see some drying out of liquidity. Zeev

To: Alastair McIntosh who wrote (17741)	3/18/1999 10:16:00 PM
From: Victor Lazlo	Read Replies (3) \| Respond to of 18691

Alastair- << Zeev, a good indication of current market valuation is the fed funds model which now indicates that the market is 27.7% overvalued. >> 1. The market has been "overvalued" for about 16 years or more. 2. Most people who talk about the market being overvalued are ignorant of a very simple fact. If you multiply the number of companies listed on the NYSE, the NASDAQ, and the AMEX times the number of shares of each company in the float, you get roughly the same number as you would have 2.5 years ago. In other words, there are the same number of shares available to be bought or sold as there were 2.5 years ago. Howver, there is lots more money chasing these same number of shares. This is simple arithametic. This is a simple stock price inflation going on here that nobody seems to recognize. There is much more money than there was 2.5 years ago chasing the same number of shares that were available 2.5 years ago, and this will only continue. Consider: --Mergers and acquisitions have taken shares off the markets. --Company stock buybacks have taken shares off the markets. --Initial public offering activity has not been especially robust the last few years, contrary to popular impressions. All this adds up to fewer shares available even though more people want to buy more of them. Simple arithametic. Victor