Freedom Lawyers of America

Safe Money e-News
August 24, 2002

Now that the market has been rallying, Wall Street's snake-oil
salesmen are coming out of the woodwork and back onto their
old soapboxes, hawking their favorite stocks.

Their chant sounds eerily familiar: "Take some of this stock
and it will cure all that ails your portfolio. The market
has hit bottom. This is your LAST CHANCE to get in before
stocks really take off."

Meanwhile, behind closed doors, many are telling their own
colleagues this is a last chance all right -- THEIR last
chance to hook some last suckers before the market tanks
again.

The reality: These same snake-oil salesmen have come come
out in droves every time the market has rallied since 2000.

And after each of these episodes, every dollar of gains from
the rally has been been smashed, wiped out.

This week's rally is no different.

Reason: Fundamentals are deteriorating -- not improving.
Stocks are still grossly overvalued. The growth in the economy
has plunged from 5% in the first quarter to 1.1% in the second.

So far in the third quarter, job growth is virtually non-existent.
Consumer confidence continues to slip. Chain store sales slumped
for the second consecutive week.

And Wall Street is still talking about an earnings recovery?!
Heck! An earnings recovery was illusive even when they thought
the economy was booming! With the economy sinking, it's a pipe
dream, pure and simple.

What happens without the long-hoped-for earnings recovery?
The rally will disintegrate. AGAIN.

Just look at what's happening RIGHT NOW ...

* Jobs are disappearing. A new survey from the Bureau of Labor
Statistics shows that corporations are downsizing even when
we're not in the middle of a recession. And for victims of
this downsizing trend, it's about as hard to find a job now
as it was during the early 1990s recession.

http://www.safemoneyreport.com/home/daily.asp?archive=082202

* Stocks are still overvalued. The S&P 500 trades at a
whopping 33 times earnings. That's more than double its
historic P/E ratio. Just to return to its normal valuation,
the index would need to fall by at least half.

http://www.safemoneyreport.com/home/daily.asp?archive=082102

* The government keeps piling on more debt. The "official"
U.S. deficit has ballooned to $29.2 billion. As one economist
remarked to Bloomberg, "One of the foundations of the strong
economic performance of the 1990s was the perception that
the U.S. had its fiscal house in order. With many of the
other elements of the strong economy having disappeared, it
would be a further blow to confidence if that pillar were
taken away as well."

http://www.safemoneyreport.com/home/daily.asp?archive=082002

* Easy credit may get tougher to come by. The Fed has begun
a crackdown on so-called "sub-prime" lenders -- credit card
issuers who market to borrowers considered high risk. Without
an easy line of credit to borrow against, retailers may see
a big decline in sales over the coming months.

http://www.safemoneyreport.com/home/daily.asp?archive=081902