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Strategies & Market Trends : Roger's 1997 Short Picks
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To: Bonnie Bear who wrote (6825)11/11/1997 10:53:00 PM
From: John Nowicki  Read Replies (1) of 9285
 
The consolidation issue is extremely important, regarding shorts. There was an interesting piece in the Wash. Post business section, suggesting that a downward trend in the market might push further consolidation. Basically, since the brokerage houses would (should) be the first to note a major trend, they might see a crash upcoming, and use their presently overvalued stock to buy up smaller fish. Blow the value now while you have it.

Personally, I would add another factor to this. The slow Federal allowance of banks to enter the game has been driven by the huge success of the market. A Bear might slow up, or even reverse the trend. So it is really in the interest of banks to buy up, or merge with brokerage houses before the hit comes. Use the excess value to sneak in before its gone, and/or Congress changes its mind.

So that great brokerage short might just end up shooting upward on a merger/buyout announcement. Be careful here folks.
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