Think About It.........

Market Analysts tell us the market goes up an average of 11% a year. Keep in mind, that what this means is half the time the market does better than 11%, and half the time it does worse. Joe
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Some thoughts from Jesse Livermore:

- The second low tells the story.

- If I were to predict where the Dow would be in 6 months or 1 year, I would say, exactly where it is right now.

- Don't give up your position. Even if you know the market is going to move against you.
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Bob Stovall use to profess the ancient idea of "As GM goes, so goes the country." There may be something to this. Take a look at a 5 year and 1 year chart of GM vs. S&P 500. Remember, these were some pretty turbulent times. Joe

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Alan Greenspan & Co. have slashed the federal-funds rate three times, by a total of 1.5 percentage points, and will cut again. The average lead time between the Fed's third cut (assuming no subsequent near-term tightening) to the ends of the nine post-war recessions, has been just 2.7 months. So when the Fed cuts, the economy revives.

Typically, Wall Street leads the economy by four months. In the last four months of the nine postwar recessions, the S&P's average gain was 16.4%, with the minimum advance 8.6%. In the first four months after these recessions, the S&P rose further -- on average, 8.9%. Compounded, the advance over these eight months totaled 26.8%! So, there's reason for hope amid the gloom.

Marty Zweig March 26, 2001
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"The earnings yield systematically rises and falls with a ratio of producers' input costs to output prices. When inputs are cheap and finished products are expensive, the market's valuation of current profits is high, and vice versa.

When relative input prices fall, the earnings yield declines; when relative input prices rise, the earnings yield rises.

In this view, the high earnings yields despite low interest rates in the late 1940s and early 1950s are explained by the fact that after World War II, raw materials prices were near an all-time high relative to the general price level. But as relative input prices declined, so did the earnings yield. Similarly, the sharp rise in the earnings yield during the 1970s was due primarily to the rise in commodity prices, led by energy.

The sharp zigzag decline in input prices relative to output prices from 1980 to 1998 was the main reason for the size and timing of the sharp fall of the earnings yield and the surge in the stock market's P/E ratio. In 1999 and 2000, however, input prices rose sharply, mostly because of rising energy prices. This raised the earnings yield and cut the appropriate P/E ratio. "


John Mueller





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The Dow first reached the 100 level in January 1906. It traded above and below that level
for more than 36 years; it wasn't until May 1942 that the market left 100 behind for the
last time.
The Industrial Average first reached 1000 in February 1966. It traded above and below
that level for the next 17 years, leaving that figure behind for the last time in February
1983.
The Dow first reached the 10,000 level in March 1999. Considering the unprecedented
gains of the past several years, would it be that unusual for this benchmark to take a decade or even two before leaving 10,000 in the dust for the last time?
Daniel Turov

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The Fed's 1998 Survey of Consumer Finances found that the wealthiest 1 percent of households owned almost half of all common stock and the top 5 percent owned three-fourths of it. The concentration of stock ownership was so great that the wealthiest 20 percent of American households owned 96 percent of common stock.
The Washington Post