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$34.95 USA/$48.95 CAN She'S been compared to a beacon shining through the fog. Her thorough research, meticulous analyses, and extraordinarilyaccu rate forecasts have won her the respect and admiration of colleagues up and down the Street. A protegee of the master technical analyst Alan Shaw, she is currently Senior Technical Analyst, Vice President for Research at Salomon Smith Barney. But what some insiders remember most about Louise Yamada is that in 1994 she was among the very first to predict the greatest bull market ofthe twentieth century. In Market Magic, Louise Yamada shares her formidable skills to look beyond the daily noise of trading and help guide your invest ments through the perils and uncertainties of the next ten years. At a time when classical forecasting techniques seem to be failing us and even the professionals are at a loss as to which way the markets will go, Yamada mar shals her experience and talent to offer on target analyses of today's macro forces and specific trend forecasts for the next decade. Reading this book, you will understand why her weekly reports on various markets are so eagerly awaited by investors everywhere. Yamada describes what she saw in 1994 that led her to argue for an extended bull market. In addition, she describes her "two-tier market thesis" and explains why u.S. equities with global exposure have outperformed domesti callyfocused stocks and why this trend should continue into the future. {continuedonbackflap} {continuedfromfrontflap} Yamada reveals how macro changes in U.S. demographics have subtly altered the business and investment landscapes, and how these demographic shifts are impacting the stock market in ways that have been largely unnoticed. Her case for an extension of this bull market into the next century is must reading for allserious (and nervous) investors. Firm in her belief that new technology will continue to drive the economy, Yamada iden tifies the industries and business sectors she believes will thrive under its expanding influ- ence. Market Magic offers a fresh perspective on the new and emerging realities. Forging links between the forces that will be at work in the future, Louise Yamada reveals a thought-provoking scenario for the market's next ten years, and details how investors can track its course through technical analysis. Market Magic is an enlightening analysis of the big picture from one ofthe best minds in the investment community. LOUISE YAMADA is Senior Technical Analyst, Vice President for Research at SalomonSmith Barney,wheresheisresponsible for sector analysis ofthe U.S. and global mar kets, and where shewrites for widelyacclaimed reports, including Portfolio Strategist, Market Interpretations, Japan Portfolio Strategist, Latin American Strategist, Group Spectrum, and special research Trends reports. Her work has been the subject oftwo featured interviewsin Barron's. A graduate ofVassar College,Ms. Yamadateaches at the New York Institute of Finance and frequently appearsasa gueston CNBC. JacketDesign:BrianBoucher AuthorPhotograph:MarkMcQueen ADDITIONALPRAISE FOR MARKET MAGIC "LouiseYamadaisone of the brightesteconomic minds around. Her synthe sis of common sense with the arcana of the chart room makes this a must read for anyone who hopes to be asuccessful investorin the future. You'll be ableto dowell and to understand how and why it happens!" -JudyHaberkorn, President-Public & Operator Services, Bell Atlantic "Yet another outstanding achievement by Yamada. Market Magic is ground breaking... and amust-read." -Peter S.Watson, SeniorAdvisor and DirectorofInternational Business and Economics, Centerfor Strategic & International Studies Market Magic OTHER BOOKSIN THE WILEY INVESTMENTSERIES Merton Miller onDerivatives/Merton Miller Cyber-Investing: CrackingWall Street with .YourPC, 2nd Edition/ David L. Brown and Kassandra Bentley The Investor'sAnthology: OriginalIdeasfrom theIndustry's Greatest Minds/Charles D. Ellis withJames R.Vertin Mutual Funds ontheNet: Making Money Online/Paul B. Farrell It Wasa ~ry Goodtear: Extraordinary Moments in StockMarket History/Martin S. Fridson Independently Wealthy: How toBuild Wealthin theNew Economic Era/Robert Goodman REITs: Building .YourProfits with RealEstate Investment Trusts/ John Mullaney TheArtofShort Selling/Kathryn F. Staley Market Magic Riding the Greatest Bull Market of the Century louise Yamada John Wiley & Sons, Inc. New York • Chichester • Weinheim • Brisbane • Singapore • Toronto Aportionofthe author's technical studiescontainedherein have beenpreviously published in licensed reports bythe former Smith Barney, now Salomon Smith Barney, and have beenavailable assuchto clientsofSmith Barney. Itiswith the permissionofSalomon SmithBarneythat these (and afewofAlan Shaw's thoughts in licensed reports) are presentedin theirpresentform herein. This bookisnot intended asan offeror solicitation bySalomon Smith Barneywith respect to the purchase or sale ofanysecurity. Author's Note:This bookisintendedasathought-provokingexploration ofthe investmenthorizon resultingfrom the author's observationin the hope that readers will continue the question-askingprocess. Therecan be no guaranteesissued asto future performancein anyofthe areasdiscussed; noristhis an offeror solicitationwith respect to the purchaseor sale ofanysecurity. Before makingany investmentdecision, theadvice ofaqualified investmentprofessional should be obtainedto determinesuitabilityof investmentchoice based on each investor'sindividualneeds, aswell asan evaluationof factors notreadilyapparentto the nonprofessional, which could haveamaterial effect on the qualityofany investment. Superchartsisa registered trademarkofOmega Research, Inc. This bookisprintedon acid-freepaper. i§ Copyright© 1998byLouiseYarnada.All rights reserved. PublishedbyJohnWiley& Sons, Inc. Publishedsimultaneouslyin Canada. No partofthispublicationmaybe reproduced,storedin aretrievalsystemor transmittedinany form or byanymeans, electronic, mechanical, photocopying,recording, scanningor otherwise, exceptaspermittedunderSections 107or 108ofthe 1976 UnitedStatesCopyrightAct, without eitherthe priorwritten permissionofthePublisher, or authorization through paymentofthe appropriate per-copyfee to the CopyrightClearanceCenter,222 Rosewood Drive,Danvers,MA 01923,(50B)750-8400,fax(508) 750-4744. Requests to thePublisherfor permissionshould be addressed to the PermissionsDepartment,JohnWiley& Sons, Inc., 605Third Avenue,New York, NY 10158-0012,(212) 850-6011, fax(212) 850-600B, E-Mail: [email protected]. Thispublicationisdesignedto provideaccurateand authoritativeinformationin regardto the subjectmattercovered. Itissold with theunderstandingthatthepublisherisnot engagedin renderinglegal, accounting,or otherprofessionalservices.Iflegal advice or otherexpert assistanceisrequired, the servicesofacompetentprofessional personshould besought. LibraryofCongressCataloging-in-Publication Data: Yarnada,Louise. Marketmagic: ridingthe greatestbull marketofthecentury/ by Louise Yamada. p. cm. Includesindex. ISBN0-471-19759-9(cloth: alk. paper) 1. Wall Street-History-20thcentury. 2. Stockexchanges-United States-History-20thcentury. 3. Stockexchanges-History-20th century. 4. Economic history-l945- I. Title. HG4572.Y35 1998 332.64'273-dc21 Printedin the United StatesofAmerica 10 9 B 7 6 5 4 3 2 To Kate, Kathryn Welling, withoutwhose interestand beliefin myresearch this bookwould never havebecome areality. In memoryof the two exceptional and inspirational women in mylife whowith unflappable affection, humor, dignity, and grace, strove for intellectual excellence and integrity, aesthetic elegance, and peace; whowill livealwaysin the hearts and aspirations of those who loved them: Inez D'Amanda Barnell and Maria D'Antona Melano