What about December? Are stocks a "good buy" or is it "good bye"?
With five weeks to Y2K, the stock market is not behaving as if it is
scared. Will Y2K have NO effect in December? January 1? The stock market
has lost some of its upward momentum and some last minute tax selling is
due. Will investors wake up to the fact that asset inflation (stocks and
real estate) is beginning to spill over into good and services?
In what history may refer to as the "stealth" bear market of 1998 to
2000, we find a broad divergence between the Tech leaders and most other
stocks. The former continues to go through the roof while the rest of the
market remains dormant. More and more investors have decided to join the
party rather than miss the action. Still, as I am sure you remember,
from November 18th to December 18th of 1899, the Dow lost 23%. Will
history repeat? Will 10,000 hold? Stay tuned."
The majority of stocks are DOWN for the year. Within 7 days, we
forecast THE NIGHT OF THE LIVING DEAD Stock Market - POOF and No more bull
in 1999. For the market leaders, technology and finance, all the
good news is already built in. Next comes Y2K and two interest rate hikes.
The question becomes: HOW LOW in 1999? Then, HOW LOW in 2000?
Celestially and terrestrially, we expect the stock market to be "fall challenged". Looking forward, we have the annual October Scare, Y2K, plus the second pass of Jupiter Square Neptune October 11 and Saturn Square Uranus November 14. Together this suggests that the "fearless" US investor may begin to exercise caution, if not fear, for the first time in the recent bull market.
What would YOUR portfolio look like in a bear market? Morningstar rates American companies relative to their industry peers, by growth rate, profitability, stock price and overall financial condition. I personally like their stock valuation section. Not surprising, is that most stocks are way overvalued. The closer we get to May 2000 (Jupiter/Saturn conjunction), the more likely portfolio values will return closer to their VALUE pricing. What would this do to YOUR portfolio?
The following is a sample of Morningstar's stock valuation rating of
some widely held shares of 9/3/99. Note an Appraisal Ratio > 1.0
= Undervalued, while an Appraisal Ratio < 1.0 = Overvalued.
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I strongly recommend researching your portfolio to avoid any unpleasant
shocks.
The Dow market rose 5 percent the week of July 1, its best performance since October 1998. A few days later on Thursday, our pricing system (FINALLY) calculated a POTENTIAL PRICE TOP OF DJIA 11200 and SPU 10416. Whether this holds beyond the New Moon and Mercury S/R (A new market cycle) depends on next week's earning show. Still, when most of the analysts I track see great risk in the market and only differ as to WHEN - this month or next for disaster, that is too foreboding. Given the BIG picture, it won't matter if we were a few days or even a weeks early.
Japan, we continue to SHOUT, is a major mess that is about to unfold.
From the July 3, 1999, Australian Financial Review Mr
Yen blows through lest the bubble burst:
"It was confirmed during the week that one of the world's top finance
officials, Japan's Eisuke Sakakibara - known as Mr Yen - is about to retire
from his job as the country's main international negotiator. But why?
He told an acquaintance that he decided not to press for another year in
the post because he expected that Wall Street would crash during that time,
and he did not want to be around to try to deal with the consequences for
Japan.
It was Sakakibara who first conceived the brilliant nickname for the
US economy - bubble.com. The US is vulnerable, he says, to the possibility
that the Internet-led stockmarket bubble will burst with awful consequences."
Remember what Saturn/Neptune did to the Oil sector? We expect Saturn/Uranus to do this doubly for the technology sector. Last year the excuse was "the Asian Crisis"; this year it will be "Y2K." No matter, I believe it is MUCH better to be safe than sorry. Look at the charts of recent Internet IPO's like BNBN or DIR - that and more could be the fate of many technology-rich portfolios this summer.
I don't understand why it is radical to believe that stocks that have
risen 1000% in a year can drop 90% in a year. Don't forget that few
sober analysts thought Internet/Tech stocks were bargains last year! When
Yahoo (YHOO) was over 220, we forecast it would be 20 before year end.
Closing Friday at 147, it still has FAR TO FALL. One global
money manager we know has a value target of 10 for Amazon (AMZN); although
I am not sure it will break 22 3/4. AOL's stock price has long been
a joke and I advise you don't let the Cosmic Giggle get you! RUN,
DON'T WALK FOR THE EXITS.
Similarly, we have forecast a decline in internet stocks, with Yahoo
closer to 40 than 400 by year's end. In the 1880's, the stock market
loved electric companies, in the 1920's, radio stocks , and in the 1960's
computer company mania. Today's internet mania with investors showing
No fear and NO common sense, will be history. DANCE BY THE EXIT!
Y2K IS COMING and fear
of this events will almost certainly take the stock market down the last
half of the year. Also coming next year is a Total Solar eclipse
August 11, 1999. So even if the market continues to rally until January
4 or Aug. 11, 1999, this is a "ring past not". Remember, you
don't have ANY safe profits until the day they are cashed out. Time
will tell if our long term caution is merited. We continue to believe
so.