32 of 32 people found the following review helpful:
4.0 out of 5 stars
A Technical Look at Similar Market Conditions to Today, October 1, 2000
This review is from: The Fourth Mega-Market, Now Through 2011 (Hardcover)
Technicians are those who look at a stock's history of prices and volumes to estimate what will happen to price in the future. Mr. Acampora is the chief technical analyst at Prudential Securities, and extends beyond the normal limits of technical analysis to predict the future for the current bull market.
Using analogies to three earlier markets, he argues that the peak of the market should probably be above 20,000 on the Dow Jones Industrial Average and that peak should occur between now and 2011. Notice that at current levels, this could be as little as 6-7 percent annual compound gains.
He argues that the current market is being driven by a combination of peace, low interest rates, low inflation, and technological innovation. He points to 1877-1891 (the age of railroads and industrial expansion), 1921-1929 (the age of cars and radio), and 1949-1966 (the age of television, computers, and copiers) as similar periods.
A critical part of his argument is that the current bull market started in 1994 (rather than 1982, as many would argue). His argument is based on the cold war not ending until the late 1980s. If the bull market actually stared in 1982, then we have little additional gain to expect.
A weakness in his argument is that the advance-decline line should be strong now, but it has been fading for a long time. Another weakness is in insisting that stock prices are not high now. The average p/e is enormous compared to earlier markets (his counterarguments is that most stocks are trading at 12 times earnings).
You can read the counterarguments to his thesis (and his responses) in chapter 9.
Many Wall Street professionals will tell you that technical analysis is about as good as going to your local palm reader. People who believe in an efficient market think that technical analysis is a waste of time. On the other hand, Mr. Acampora has been right more often than not in the last 10 years in forecasting the bull market. You should decide for yourself. Many top professionals now use fundamental and technical analysis (but, of course, most of them fail to beat the market averages).
If you don't know anything about technical analysis, you will find a brief, simple explanation in chapter 2.
One of the most interesting parts of the book is a comparison of the characteristics of the overall market since 1994 to the three earlier markets. The sizes of the drops in the market are similar, but the speed of the drops is much faster now. On the other hand, the speed of the drops is similar to the 1920s. I couldn't help but wonder if the end of the current bull market may also be like 1929. Certainly, the drop in Internet stocks has been similar.
I came away unconvinced by the argument here. I just don't think that the future repeats the past that closely. Here are some examples of things that are different now: the rate of technological change and impact is much faster and broader; inflation is low in the U.S. but not in many other places; the dollar could easily fall if foreigners decide to stop propping it up by buying U.S. securities to recycle the trade deficit; and there are many shortages (such as of trained engineers) that could greatly increase the rate of inflation.
Nevertheless, I thought that the book was worth 4 stars just for making these data available about comparable markets so that we can each think about them, and draw our own conclusions.
After you have read and evaluated this book, I suggest you think about other places where history has not proven to be a very good predictor . . . and where it has. Then consider whether the stock market is likely to be more like the former . . . or the latter. Good luck with your investments in any event!
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9 of 9 people found the following review helpful:
4.0 out of 5 stars
Interesting read., October 29, 2000
This review is from: The Fourth Mega-Market, Now Through 2011 (Hardcover)
I read a lot of investment material and this is the first time I have heard of the concept of a "mega-market". Mr. Acampora provides interesting comparisons to prior mega-markets with very brief lessons in technical analysis. He has made a boring subject interesting and uses a lot of personal examples. I think it takes guts to go out on a limb to highlight a phenomenon and to have in print that you predict that this bull market will run through 2011. This is even more corageous considering he finished this book during the present market turmoil. I don't find this to be vanity but more of a desire to share his knowledge with others. You are not going to learn all the details of technical analysis, but reading his book gave me the confidence to contiue investing in this bear market.
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10 of 11 people found the following review helpful:
5.0 out of 5 stars
Something to KNOW,BELIEVE, AND DO, October 4, 2000
By A Customer
This review is from: The Fourth Mega-Market, Now Through 2011 (Hardcover)
I thoroughly enjoyed this book. It was written in layman's terms and I walked away with SOMETHING TO KNOW--todays bull market is very similar to at least 3 previous post-war periods and is likely to continue. SOMETHING TO BELIEVE--the future has never looked better and if technical analysis is used properly to identify risk and opportunity I will continue to enjoy this bull market for years to come. SOMETHING TO DO--its time to review all of my portfolios to be sure that my stocks based on Ralph's thesis are 4th Mega Market compliant. He predicted Dow 7000, Dow 10,000 and now a sustained run through 2011, let the good times roll. Thanks Ralph.
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