Gekko

DURING his visit to Washington, Jiang Zemin got a standing ovation for his human-rights record. From the IRS.

My people have been e-mailing me to get a view on the meaning of Grey Monday in the stock market. OK—I think the volatility that we’re seeing is the sign that we’re bouncing around near the top of equity values for this cycle. I think that it is still possible for the equity averages to make new highs, but they won’t go much beyond where they are now. Long-term dollar interest rates, which are the denominator of the stock-price equation, aren’t going down much from here, and I doubt they will go below their October 1993 lows. Earnings, the numerator, are and have been strong, but they would have to get even stronger over an unsustainably long period to justify analysts’ and investors’ projections. So this isn’t the time to make flat-out directional bets. Look for relative value. And forget about software magic saving us all from the constraints of capital and labor.

JD

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John Dizard

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DURING his visit to Washington, Jiang Zemin got a standing ovation for his human-rights record. From the IRS.

My people have been e-mailing me to get a view on the meaning of Grey Monday in the stock market. OK—I think the volatility that we’re seeing is the sign that we’re bouncing around near the top of equity values for this cycle. I think that it is still possible for the equity averages to make new highs, but they won’t go much beyond where they are now. Long-term dollar interest rates, which are the denominator of the stock-price equation, aren’t going down much from here, and I doubt they will go below their October 1993 lows. Earnings, the numerator, are and have been strong, but they would have to get even stronger over an unsustainably long period to justify analysts’ and investors’ projections. So this isn’t the time to make flat-out directional bets. Look for relative value. And forget about software magic saving us all from the constraints of capital and labor.