Market Gems:Stocks w/Strong Earnings and High Tech. Rank Message Board

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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank

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To: Jenna who wrote (72634)	11/21/1999 4:25:00 PM
From: kendall harmon	Read Replies (2) of 120523

Today's NY Times on Rising volatility: <<...But if rising interest rates don't seem to faze stock investors, rising volatility should. While stock prices have been rocketing, price swings in shares are now approaching levels seen only during two famous crisis periods: the Russian debt collapse of last summer and the crash of 1987. High volatility makes it harder for investors to get in and out of trades at reasonable prices and therefore raises trading costs. Although increasing volatility permeates all aspects of the market, price movements among the largest companies are most disturbing because they are the ones that investors believe are the safest and most liquid. According to Salomon Smith Barney, price swings among the 100 largest stocks in the Russell 1000 index are now averaging 42 percent, annualized, close to the 44 percent during the Russian crisis and the 46.5 percent endured in 1987. "Everyone looks to these companies as being the most liquid," said Keith L. Miller, director of United States quantitative research at Salomon Smith Barney, "but they're experiencing greater volatility." Behind these swings are high prices -- which leave much room to fall -- and investor concentration in a handful of growth stocks. But the mania for stocks that are rising -- known as momentum investing -- contributes mightily to volatility, too. Online investors made the technique notorious, but now even pension fund managers have succumbed to its lures....[and who is really to blame???]... frequent traders do poorly in their own accounts and raise other investors' costs by increasing volatility. Does anybody else see something wrong with this picture? >> nytimes.com

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