As has been typical of this market since the vicious lows that marked the ending of the last bear swing, the market quickly rebounded last week after taking a severe beating to close out September. Very impressive...and yet again reinforcing the bias to buy and hold this market --- selling continues to be punished with under-performance. The up-trend continues, but your caution should ride along with the highs of all the party-goers.

To belabor my point about the market being expensive, I pick on the sector that seems to always be the poster child for speculation and hyper-valuation, the tech stocks.

First a quote (from Barron's this weekend, "Are Laggards Poised to Become Market Leaders?" by Michael Santoli) that should make any of you interested in fundamental value raise a brow or two:

"...a look even at the more fundamentally admirable tech heavyweights shows the risk of capitalized optimism. One tech-focused investor remarks that at the end of '99, Intel shares were at 41, or 25 times what Intel was expected to earn in 2000.

Today, at 29.61, Intel trades for 38 times forecast 2003 earnings and 28 times the hoped-for 2004 number. Intel might have better luck meeting next year's estimates than it did with the forecasts for 2000, but that in itself doesn't make the stock a Buy."

Note well that this means Intel is actually MORE expensive than it was as the stock market bubble was getting ready for one last cataclysmic rise and then bust. This does not mean a crash is now imminent. A correction back to "reasonable" valuations will happen, but as many of you know, I am less and less willing to make bold predictions about when that moment will come (or how it will happen - for example, stocks may simply meander from here and "wait" for the economy to catch up). Regardless, we do know that, for whatever reason, people are willing to pay just as much, or more, for many stocks as they were during our recent bubble. Personally, that does not give me much confidence that we are in the EARLY stages of a new bull market. Instead, it makes me feel like selling will probably not to be a losing strategy for much longer. (If you *insist* on pressing me for prognostication, I think that the Feds and Bushies will do all they can with what little they have left to keep goosing the economy in time for voters to express their approval at the polls come Nov, 2004. Barring any major jolts to our economy, I think they should continue to have some moderate success at least through next Spring or Summer).

For your bubble-enjoyment, I have attached a chart from this same Barron's article that shows how closely the bubble in tech stocks, both the rise, the pop, and the current resurrection map extremely well to past bubbles that have come and busted (The Nikkei in Japan, gold in the 80s, the Dow Jones Industrials before and after the 1929 crash).... The chart does not show what happens"post-resurrection," but it is interesting to note that the Dow did not recover until after World War II, the Nikkei is still nowhere close to recovery, and gold is just now under-going a vigorous multi-year recovery after taking two good beatings in the early 90s and late 90s.

Consider yourself informed, if at least not warned!