Hi!MP

What I fail to understand is why the market isn't a lot lower at this point in time. I naively ask myself where should the market be? And, then compare todays levels with where the market was in 97-99 (roughly). If todays levels are as they were in the 97-99 bull times, when the economy apparently was humming along beautifully, then in should I be buying the same market in recessionary times (ie today)? It just doesn't make sense. to me......

Could it be that for periods of five years or more that you are reffering to, more and more money find their way to the market (offsetting any new listings or capital raises) and pushing the price level equillibrium a bit higher than before? Of course in the meantime funds are withdrawn, put on hold, reinvested but on the long run and on average we are facing an expanding open system. Could it be that entropy is increasing? (mercy me please... I only had one course in thermodynamics and I never really liked it )Just a thought...rgds,Dimitris

What I fail to understand is why the market isn't a lot lower at this point in time. I naively ask myself where should the market be? And, then compare todays levels with where the market was in 97-99 (roughly). If todays levels are as they were in the 97-99 bull times, when the economy apparently was humming along beautifully, then in should I be buying the same market in recessionary times (ie today)? It just doesn't make sense. to me...... >>The level of the market is, and should be, unrelated to current economic conditions. As an empirical matter, market movements correlate best to economic changes about 18 months in the future, but even that correlation is very weak.Going back to my favorite simple model (don't jump on me MP, I don't use this to price stocks, only to demonstrate the relative magnitude of factors):P = D/(r-g)where P is the price of a stock, D is the dividend payment, r is the rate of return an investor will earn and g is the growth rate in dividends. Consider how long it will be until you earn back half your investment in present value cash. The formula is ln(0.5)/ln(1-D/P). Using the 1.48% dividend yield of the S&P500, that gives 46 years. So half of the return an S&P500 investor can expect is determined by the value of the S&P500 in 46 years, and half on cash flow received during that period. On this scale, current economic conditions don't matter very much.

long bonds (1022)short stocks (1054)long crude (2799)short euros (9122)hey, got nothin' better to do!MP

I'm still talking this thing down! As you know, on Sunday night, I called the S&P's a sell at 1054. And it did not please me to see them rise so much right off the bat yesterday, seeing as I was actually predicting a rebound like that, and calling it a long at the close on Friday.But over the weekend, I decided to try to practicing looking at these things in a different way, a way that can take the other side of an inordinate amount of capital. Because even if you can predict these small moves perfectly, you cannot move 10 billion dollars in and out on them.<deleted>MP

If we are going to dig up my market calls, this one yields some interesting perspective.1) stocks - I had been mostly bearish for a while, though it wasn't until that non-rhythmic pocket of sellers came out of left field on that day when there should have been - and were - buyers, that I went so far as to advocate the unusual barbarism of option contracts,2) oil - I had been bullish since around 24, based on some earlier chart calls I mentioned in another forum,3) bonds - I had been bearish from the top of the November sellof, based on fundamentals, but the charts said go long, and4) dollar/euro - darn those commie scumbags, they're all after my Microsft X-Box, my '67 Corvette Stingray, and my wife.Conclusion being, the charts never lie whereas fundamental analysis - even when based on something so fundamental as the low productivity of European heathens - is a toss of the dice. MP