Puckish view. (Wall Street West)."We are going for the hat trick hat trick n. Sports 1. Three goals scored by one player in one game, as in ice hockey. 2. Three wickets taken in cricket by a bowler in three consecutive balls. 3. ," said Chip Hanlon, money manager and editor of Manhattan Beach-based Unfundamentals, an online financial newsletter service. Hockey fans know that hat trick means scoring three goals in one game -- but Hanlon is speaking a bit sarcastically, and predicting that 2002 will be the third straight down year for major stock averages. "I think we may see some rallies, but any rally will just get taken down by the bear again," he said. The big problem is that stocks still trade at fundamentally high values, or price-earnings ratios Price-earnings ratio Shows the multiple of earnings at which a stock sells. Determined by dividing current stock price by current earnings per share (adjusted for stock splits). above long-term norms, Hanlon said. While stocks are still trading around 20 times earnings, they reached into single-digit price-earnings ratios back in the 1970s, Hanlon warns. And stocks back then paid 5 percent yields in dividends, not 2 percent like now. The other worry is that markets tend to overshoot o·ver·shoot n. A change from steady state in response to a sudden change in some factor, as in electric potential or polarity when a cell or tissue is stimulated. on the top and undershoot un·der·shoot n. A temporary decrease below the final steady-state value that may occur immediately following the removal of an influence that had been raising that value. on the bottom -- psychology drives investors past fundamentals, at least for a few years. So we could see single-digit price-earnings ratios again, meaning the bear is only about halfway into hibernation. Investors may want to look for specific trading opportunities, or yield-oriented funds, Hanlon advised. Contributing columnist Benjamin Mark Cole Mark Cole is a multi-instrumentalist blues and roots musician based in Gloucester, UK Music Mark primarily writes and performs blues music but also writes and performs music influenced by other American roots music genres such as americana, cajun, zydeco, bluegrass and writes about the local investment community. He can be reached at sevencontinents@mindspring.com. |
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