"In a single day's mail on March 1, 2004, I received four sizzling promotions describing in breathless prose how to make a zillion dollars in the stock market. . . . These wild promotions trolling for money tell me that 2004 could be a watershed year for the U.S. stock market. I've seen this trend several times before major market declines in years past. But the scope of this 2004 manure pile of investment promises is absolutely astounding. Is the next down leg nigh?"

Charles Allmon

Growth Stock Outlook

Chevy Chase

"Thanks to the recovering economy and significant productivity gains, . . . companies are piling up the cash. Balance sheets have been repaired, and only so much money can go into new capital investment. . . . As earnings continue to mount, managers will have to decide what to do with the surplus funds. Currently, the S&P 500 companies hold $2 trillion in cash on their books. This equals slightly more than 20 percent of their collective market capitalization and compares to the longer-term cash-to-market-cap average of 16 percent or so. The earnings payout [dividends divided by earnings] ratio, meanwhile, stands well below the post-World War II average of 51 percent and even the more recent 20-year average of 40 percent. Curiously, [however], after a flurry of interest in the immediate aftermath of the bubble bursting, dividend-paying stocks have taken a back seat to the higher-octane, cyclical stocks."

Edwin D. Everett

The Babson Staff Letter, David L. Babson & Co.

Cambridge, Mass.

"Adding to the positive economic environment and strong technical readings is the pre-election cycle that will likely gain momentum. . . . The market has risen in 10 out of 13 presidential elections since 1952, with an average gain of 11.9 percent in the up years. . . . From mid-May up until the presidential election, the S&P 500 index has risen during the last five months preceding the election in every election since 1980."

The Chartist Mutual Fund Letter

Seal Beach, Calif.

"For all intents and purposes, the multi-year bull market in bonds ended in March 2004. And it won't be getting easier for the bond market for a long, long time. The 46-year low in interest rates is done with. On a long-term basis, a completely different cycle has been set in motion. The pressures on rates to make their way higher will be constant and consistent. Instead of back-to-back years of falling interest rates, there will now be consecutive years of rising rates. . . . It's going to take a contraction in the American economy, as well as in the international scene, to keep the multi-year bond bull market intact. "

Irwin T. Yamamoto

The Yamamoto Forecast

Kahului, Hawaii