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5/23/2005
A Rare Event, by Victor Niederhoffer

The S&P 500 today is lower now than it was six years ago. This is one of those rare market events that give the bears unusual hope but is nonetheless completely consistent with a random walk along the path of 6% a year capital appreciation and 1.5 million percent-a-century drift. It's hard to countenance, however, and many people have been,  are, or are closely related to those who have been "snatched" -- so bereft of optimism that they lurch glassy-eyed toward financial ignominy, grateful for a negative 1% return so long as someone assures that them that there is absolutely no risk involved therewith.

Yes, it's precisely at such times that articles appear saying that commodities are so much better than stocks, and pointing out that this or that sector is underperforming . Bloomberg has a nice article in this connection on the recent underperformance of a white shoe brokerage house's IPOs. This brings to mind the 2003 forecast that the Collab and I made that all IPOs that made it to the front in that environment were destined on average to double within a reasonable time.

On another front, the market is quietly approaching the round number of 1200 on the S&P and readers are beginning to write in asking such questions as whether companies beginning with alphabetical letters A and B are better than others.

All these questions and the myriad related ones call out for some counting. and we will not be remiss in that regard in the imminent future.

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