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Strategies & Market Trends : Value Investing
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To: James Clarke who wrote (11139)9/11/2000 11:45:01 AM
From: Freedom Fighter   of 78719
 
James,

My view is that the current environment is still an aberration of some sort. I think some of it has to do with indexing becoming so popular and the rest has to do with individuals that don't know very much trading for their own accounts in large numbers.

I think the "buy any dip" mentality is still very much in place among the latter.

What I've been noticing is that the "public" will buy almost any serious dip in large cap blue chip stocks. (S&P500 members)

That will usually drive the price back up 20%, 30% or more quickly regardless of the merits or fundamentals that caused the initial decline. Then, over time, if the original decline was appropriate, they sink it again. Lucent is a good example of that, but there are many others. One might say that "ignorance is bliss" for a lot of traders that are playing the bounce.

On the flip side, small caps are getting little if any bounce regardless of how well the company is doing.

So I think if you've been focusing on "real" good values among large caps you've been doing better than is typically the case based on my experience from the late 80s and early 90s. YOu've been getting the bounce almost immediately.

If you've been focusing on smaller illiquid companies you are having a tougher time than is typically the case.

That's my observation and the way my own portfolio is acting.

Wayne
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