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Pastimes : The Naked Truth - Big Kahuna a Myth -- Ignore unavailable to you. Want to Upgrade?

To: MythMan who wrote (44534)	6/2/1999 9:28:00 AM
From: Lucretius	Respond to of 86076

ho ho ho.. i have been praying to see sentiment like this.... what me worry? Higher Rates Aren't Death Knell "The odds are increasing the Fed will tighten," Alan Skrainka, chief market strategist at Edward Jones in St. Louis, said today, echoing the thoughts of many on Wall Street. "Two key reports will be employment on Friday and CPI due on the 16th. Unless we see a significant change or new evidence the economy is slowing down" the Fed will likely tighten. However, Skrainka argued a rate hike (or even two) wouldn't be so terrible to those long stocks. Since 1917, stocks were up an average 8.5% one year after a first tightening in a series and up 4.5% one year after the second, he said. "It's only when the Fed gets caught off guard by inflation and has to play catch up with a series [of tightenings] do you see the market deteriorate," the strategist said. "The notable exception being in 1987 when the Fed hiked rates in an overvalued market and stocks took a tumble." Although some contend the current environment compares (un)favorably enough to 1987 to foster a repeat, Skrainka notes 30% of NYSE stocks are down 30% from their highs, as are more than 50% of Nasdaq stocks. "From our point of view, you can't look at the P/E on the S&P 500 and say the market is wildly overvalued," he said. "There are a handful of stocks getting hit hard but individuals can still do well buying good stocks at a good price."