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

To: Fred B. who wrote (60016)	5/20/1999 2:59:00 PM
From: Skeeter Bug	Read Replies (2) \| Respond to of 132070

fred, this thread isn't that bad... except for magner ;-) in any case, here is my view. historically: 1. low pes are for cyclical tops in eps, high pes are for bottoms 2. people invested in probabilities and not possibilities (internuts are a prime example). 3. valuation was more closely related to growth. the question is supply and demand, as you state. the key, imho, is the demand, where it comes from and is it sustainable. is demand due to 401ks? why is debt growth increasing? why is debt rising in double digits? how long can debt rise so quickly? why is money growth rising so rapidly? is it sustainable? the demographic issue you cite is intriguing. more folks making money = more folks investing = more demand for stocks. i don't think anybody debates that. what is debatable, imho, is how much more demand is due directly to demographics. surely some demand is due to a record bull market. bull market ends, so does this demand. surely some demand is due to monetary growth. it ends, so does demand. surely some demand is due to drastic increases in debt. once the debt machine ends, so will this demand. am i a negative person? no way. i want things to turn out well and hope we get bailed out somehow. however, when the s&p stocks appreciate at 1000% greater rate than their company's eps growth, i take issue that this trend is sustainable for the long term. i also believe that the folks that act so irresponsibly as to run up these stocks to nutso levels are the problem - not the folks that observe it and analyze it.