From: John Conover <john@email.johncon.com>
Subject: Re: Microsoft is propping the market, and may crash with MSFT Re: Has S&P made a mistake or is Microsoft worth 400 billion?
Date: 6 May 1999 13:12:09 -0000
Archimedes Plutonium writes:
>
> John, can you elaborate on that. It is interesting for perhaps bull
> markets occur with any sustaining strength and endurance when there
> exists some form of monopoly in the midst of the bull market. That the
> bull market requires some company that continues to have phenomenal
> profits, such as Microsoft with its 30-40 cents on each sales dollar.
> And of course, Microsoft inflates the smaller software companies such
> as the Internet companies.
>
> John, I am wondering if a large monopoly is almost an essential
> requirement for a rip roaring bull market. That a up market never
> really becomes a bull market unless a large monopolistic company is
> present in the marketplace, and that its performance permits the
> continuing optimism.
>
There were companies that were a large "monopoly" in the bear markets,
too. So the lemma would be that a large "monopoly" would be an
essential requirement for a bear market. The same is true when the
market was flat in the 60's-70's. It seems as though a large
"monopoly" was always essential no matter what the market did.
The bull/bear scenario seems to follow the EMH fairly accurately, with
a fractal dimension of 2. See:
http://www.johncon.com/john/correspondence/981230002304.31518.html
http://www.johncon.com/john/correspondence/990212211510.16959.html
John
--
John Conover, john@email.johncon.com, http://www.johncon.com/