Red bull, black bear

It used to be that a company had to make money to attract investors. But in today's "start-up" economy, red ink no longer means red flags.

In 1999, stocks of companies that earned a profit declined an average of 2 percent. The stocks of those companies that lost money, often Internet firms, rose 50 percent.

These contrasting statistics "highlight how distorted most views of the stock market are today," notes H. Bradlee Perry, a consultant to David L. Babson & Co., money managers in Cambridge, Mass.

Mr. Perry says the "Stock Market Hits New High" headlines we've been seeing are very misleading.

"The bull market has been centered in technology, but has also included a few big powerhouses like General Electric, Home Depot, and Wal-Mart," he says. Whereas "the simultaneous bear market ... encompassed a broad range of stock groups ... many that fell 20 to 30 to 40 percent."

For example, in 1999, just 31 of the 500 stocks in the Standard & Poor's 500 Index accounted for all of that index's 21 percent gain. Fifteen of those 31 stocks were in the technology sector.

Instead of going with the tried and true, "investor enthusiasm for potential growth has become more extreme and more concentrated than ever before," Perry says.

(c) Copyright 2000. The Christian Science Publishing Society

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