It sounds somewhat similar to the Trin or Arms index, in a way, what you are actually looking at. Well, the Trin Index or the Arms Index is based just on the advances and declines, and that index to my knowledge, the last time I talked to Dick Arms, was based on the traditional advance/decline numbers as are found in The Wall Street Journal that do include all of these potential distortions that I was talking about. So to my knowledge, Arms has not ever gone back and redone their indicators because of these things. In fact, the last time I talked to Dick about it, he said that he had done some studies and felt comfortable that the distortions were not significant enough to worry about. But what we have seen in some instances -- one of the classic instances occurred in August of 2001, a few months before 9/11 -- in which stocks were in a relatively dull period, in which most stocks were just moving sideways, but all of a sudden, the advance/decline line began to rise sharply. And a number of analysts pointed to that sharp increase in the advance/decline line, and I think it was reflected as well in the Arms Index. They viewed that improvement in the advance/decline line as a sign of strength, a building up in the market ... that would clearly lead to a strong advance. But our operating companies-only advance/decline line at the same time was in a strong downtrend pattern, precisely the opposite direction of the conventional advance/decline line. So it was pretty clear that the difference between the two was primarily bond funds and foreign issues. But when we looked at foreign issues, foreign issues weren't doing anything particularly strong. So the improvement in the A/D line at that time was coming primarily from bonds -- and not from stocks.
Greed and Fear
You mentioned Japan: Do you look overseas? I have been bullish on the Japanese market for a couple of years, but I am starting to get a little concerned when I see these up 500-, down 500-type days. Is that a churning top? Is it something to watch? What are your thoughts on what has been going on with the Nikkei? We don't watch them with the same degree of intensity that we concentrate on the U.S. markets. I have tried on several occasions in the past, dating back to the mid 1970s, when I first got the idea that it would be fun, if not profitable, to be a world-wide investor. In other words, when our markets were topping out, rather than going into defensive position into Treasury bills, wouldn't it be better to find some other market somewhere else in the world? At that time, in the mid-70s, there were very few investors who were really interested in foreign markets.