[RT] GEN: Richard Arms Market Comments

[c_r@xxxxxxxxx]

        Hello all,
        I thought these comments had gone out to the group last night.  I
was prompted to re-post by Wong's remark about trading strategy tied to an
overall market view.
        
        Attended a presentation by Richard Arms at the Rocky Mountain
Chapter of the Market Technicians' Association  -- His overall market view
(as I understood) Since 1982 a secular bull market has been in force, since
1995 the "great power move" with its trend line only broken this year, now a
horizontal trading range between (roughly) 10,000 and 12000 going back about
a year.
       To paraphrase some of his comments  --  This was (is) the third great
bull market of the 20th century.  It's as if every generation has to relearn
the lessons of the market.  A powerful bull market ran from the end of WWI
to 1929.  By '29 everyone believed in "buy and hold".  Between 1930 and 1950
the DOW bounced between 100 and 200; by 1950 the market professionals all
knew market timing i.e., "buy Dow 100 sell 200".  (The dean of value
investing, Ben Graham, advised his star student, Warren Buffet, to wait to
buy until the Dow had dropped below 200.  Buffet is supposed to have said
that had he waited he would have never bought a share of stock because the
Dow kept going and never looked back.) 
        The great postwar bull ended about 1964 and the market went into a
trading range until 1982 when the current secular bull began its run.  (I
remember a presentation by Ed Kershner(sp?) of PaineWebber in '88-'89 when
he told the audience that none of us believed in a bull of the magnitude he
expected because we had all been conditioned by the previous 20 years of
trading range markets;i.e., we were all market timers.)  The market that
began in '82 took off into its "power move" in '95 and has only in the last
year broken its uptrend and is now moving sideways.
        To continue the paraphrase:  Now everyone believes in "buy and
hold".  Market timing is discredited.  If we have ended the bull power move,
we might be looking at 15--16 years of a trading range market.  So we market
technicians are in the right place to take advantage of the prevailing
wisdom.  Sixteen years from now when we're all in another meeting (and not
looking a day older) everyone will know that market timing is the only way
to make money in stocks.
        Corrections to my paraphrase by anyone present are welcomed.
Comments solicited.  
Charles Marchand