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To: Bill Hyres who wrote (41614)	4/5/1999 1:31:00 PM
From: Jacob Snyder	Read Replies (1) \| Respond to of 95453

re: "their (small/micro caps) day will come.": The market is being driven by liquidity and momentum, not fundamentals. And the liquidity is increasingly being supplied by foreigners (btw, that's usually a sign of a market top). The momentum is in the big caps; foreigners buy what they know: the big multinationals. Small caps are not going to outperform, until the market starts buying based on fundamentals. And that's not going to happen until the momentum guessers who dominate the market currently, learn some caution and fear. And that's not going to happen until we have a sustained, brutal downturn in the market. Something on the order of what happened in the early 1970s. When the S & P 500 is at the low end of its historical PE range, only then will see the small-caps begin to outperform. That long-term historical range is 10 to 20. The current trailing PE is 34, according to the last issue of BW. That number is an unsustainable historical anomaly, like 40$ (or 10$) oil, or 16% interest rates. I think the current choices are: 1) stay with the U.S. big caps, and hope you're nimble enough to jump off before the music stops. 2) go to cash 3) try to find undervalued big caps. This frustrating search is what led me to oil service. 4) diversify into foreign companies, again, looking for quality and value. My current favorite is SAP. Small cap's day will come, but it ain't here yet, and when it does, it will be a very ugly day.