To: donald sew who wrote (13204 ) 5/7/1999 5:37:00 PM From: pater tenebrarum Respond to
Don, i second your negative long term view. it is a historical fact that all bull markets that have lasted as long as this one and have shown such huge gains have ultimately led to equally major bear markets. every major advance in prices unfailingly accumulates the ingredients needed for their demise. the most important of these in my opinion are the following: 1. the degree of participation by the general public - it is at it's highest point in the history of the u.s. stock market and brings with it the potential for enormous selling pressure once a bear market commences. 2. the conditioning of investors due to the fast recoveries the market made following every major pullback - it has induced extreme complacency regarding the market's long term potential; witness the 'buy-and-hold' strategy touted by every single wall street firm and of course the mutual fund industry. 3. the market's valuation relative to GDP is at it's highest ever - in other words, the market has been in 'greater fool' territory for some time now. 4.the pervasiveness of the stock market in everyday life has reached levels that make even the late 1920's pale in comparison. the rise of CNBC and online trading are all testament to that and every contrarian must be deeply disturbed by these phenomena. 5. the increasingly intertwined fates of the stock market and the 'real' economy - even Greenspan has now attested to the danger this presents. 6. last but not least the 'new paradigm/new era' thinking that seems to gain ever more acceptance among economists and financial advisors alike - every 'new era' in history has ended with it's broad adoption by the public as well as the 'experts'.
