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

To: BGR who wrote (59812)	5/19/1999 6:14:00 PM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

BGR, 1. Rates are not as low as they were during many periods when PE ratios were MUCH lower. 2. The demographic argument was one of the primary scams behind the Japanese bubble. It is non-sensical. 3. Technological advances have always been with us, except they tended to be more productive in the past. S&P pe ratio expansion has one cause only: an overwhelming expansion of credit being funnelled into speculative activity.

To: BGR who wrote (59812)	5/19/1999 6:25:00 PM
From: Michael Bakunin	Read Replies (1) \| Respond to of 132070

Bukun, couldn't leave this post alone. You neatly summarize the 'new era' market view. I tend to agree with (1). (3), in my small view, has to be wrong. If not, where's the GDP? However, there clearly are potential efficiencies (e.g., business-to-business ecommerce) that are finally being realized, so I'll half agree. (2), it seems to me, is the real weak link. While it is obvious to you and me that the risk premium for equities has gone down, I posit a good chunk of the assets in the market represent people who don't understand that that means their return expectations necessarily have to be lower. If enough market participants have unrealistic expectations, their bids will crowd out others and set prices -- which is my fear these days. -mb