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Kandel on market woes
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November 24, 2000: 6:28 a.m. ET
Uncertainty could cloud Street for some time, but rally coming
By CNNfn Financial Editor Myron Kandel
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NEW YORK (CNNfn) - Nobody needs to be reminded that the stock market has really been clobbered since Election Day, and if you're like me, you're getting tired of hearing the old cliche that the market hates uncertainty.
Still, like most cliches, it has a lot of truth to it, and I'm convinced that it's the cliffhanger in Florida that has put the stock market under such pressure. I certaintly can't remember any more uncertainty than not knowing who has been elected President of the United States -- more than two weeks after the nation cast its ballots.
 In the two weeks and one day of trading after Election Day, the Dow industrials have lost more than 5 percent, with eight losing sessions out of eleven. But the real damage has taken place in the Nasdaq composite, which has tumbled about 19 percent. In six of its nine losing sessions, the Nasdaq fell more than 100 points each time. Investors in those beaten-down technology stocks have been shell-shocked by this recent free-fall.
But the Nasdaq's performance since it set its record high of 5,048 last March is even worse. It has now plunged 46 percent. That's its worst decline since the 1973-74 bear market. Back then, the Dow fell 45 percent and the Nasdaq fell even more sharply, but the tech indesx was still in its infancy, so its drop wasn't that significant overall.
If you're not discouraged enough by the recent declines, how about this piece of information from Wilshire Associates, compiler of the Wilshire 5000 Total Market Index, which it describes as the broadest measure of the U.S. stock market. The companies that make up the Wilshire 5000 have lost more than $1.25 trillion dollars since the closing bell on Election Day. That's right, trillion with a 't.' That comes to nearly 8 percent of their total value. From the record high set by the index last March, the loss is about twice that much.
Meantime, the once-red-hot IPO market has turned positively frigid. Remember when the sky was the limit for initial public offerings? Any new issue, particularly a dot-com, that didn't at least double on its first day of trading was considered a dud. How times have changed. A study by Thomson Financial Securities Data shows that nearly 60 percent of the new issues offered in the first eleven months of this year are now selling below their offering prices.
And reflecting the deteriorating quality of the companies that have been rushed to market recently is a six-year pattern found by Thomson. There's been a steady increase in the percentage of companies selling below their offering prices. In 1995, the figure was 18.8 percent; now, it's 58.8 percent.
Underlining this situation and the havoc the stock market has suffered lately are some figures from Sanford C. Bernstein & Co. The investment management firm says 18 percent of the 1,500 biggest companies in terms of market capitalization have lost half or more of their market value so far this year. That's the worst performance since the dark days of 1974.
"What underlies this disturbing data is the unseasoned nature of public companies today," the firm says, noting that more than 30 percent of these biggest 1,500 stocks are IPOs or spinoffs since 1995.
Having given you all this negative news, I'm still sticking to my view that once the Presidential uncertainty is settled, the market is ready for a solid rally. But who knows when that will be. It could get worse before it gets better. Margin calls are beginning to hurt, and there's sure to be more tax-loss selling than there's been in recent years, when there weren't that many losses to take.
And there are growing signs of a slowing economy, accompanied by earnings warnings. But some of that, I believe, can be characterized as piling on when the market is vulnerable. Bottom line -- I'm still looking for a good rally to begin pretty soon and last into the beginning of next year. 
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