Mark, yes I bought Talk, but I also did a ton of selling today (like the institutions did).
I was hoping that this mania would go till the end of this year, but I'm not going to let my profits go based on a "I could get more" theory.
This market is crazy or I am. I sold off 75% of my Epny today and then WOW!! It took off again. Someone must have told the institutions that a small retailer like me had some shares for sale.
I don't care if I'm wrong like I was almost 2 years ago. Imhop it's time to sell out and enjoy your wine and the roses:-))
Ps
If Kis has got any $money left, this could finally be his kind of market.
>>
The Market's Madness
Reuters
9:10 a.m. 15.Oct.99.PDT
NEW YORK -- There may be more money than brains on Wall Street.
Veteran traders say it's outrageous how the stock market swings from optimism to pessimism, based on investors' changing views of the economic reports du jour or Federal Reserve Chairman Alan Greenspan's utterances on interest rates and the stock market.
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See: Wall St. Takes Early Beating
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The tug-of-war has reached new intensity following back-to-back increases in interest rates by the inflation-wary Fed over the summer months.
Some leading stocks have had weekly price swings of 5 percent to 7 percent. The Dow Jones industrial average -- the world's most closely watched stock gauge -- acts more like a pinball machine, flipping a gain of 200 points into a loss of 250 points, all within days. The Dow hovers at 10,000 after backtracking from August's record high of 11,326.04.
This week, the volatility was at the same feverish pace as investors rushed to "re-price" stocks after weighing the latest economic reports for clues about whether the Fed will raise interest rates a third time.
Greenspan again rattled Wall Street on Friday, warning that investors should not underestimate the risk of today's stock market.
Is this kind of volatility good? No, say some experts.
It's disruptive and not in the interest of long-term investors, they say. It can eventually become a frightening agent that chases the dedicated traders out of stocks and into less risky investments.
Traders have detected an unusually high level of anxiety in the market as investors sensed that stocks can't keep rising forever.
The risk premium -- the return investors demand to cover the risks of putting their money in stocks -- has been running high for so long that people are now more nervous than ever about losing the money they've accumulated over the past four years.
"The volatility is very typical of what happens at the later stage of a bull market," said Bill Valentine, investment manager at Valentine Ventures LLC. "It's kind of like people being in a theater and somebody yells 'Fire' and the crowd runs for the door at the same time and creates a problem for everyone."
The unusual level of volatility may be a sign that a larger wave of investors could be heading for the exit.
"Nobody wants to be left in the burning theater," Valentine said. "Yet, when people realize the place may not be burning down, they walk back into the theater -- which explains why the market has shaken off losses and rallied in the past."
Valentine said Microsoft Corp. President Steve Ballmer may have given Wall Street a wake-up call -- a sort of fire alarm -- last month when he warned that computer stocks were overvalued, including his own company's shares.
Ballmer's comments that the "gold rush" in technology stocks had reached "absurd" levels triggered a one-day slide of more than 200 points in the Dow, wiping out billions of dollars of Microsoft's stock value.
"As long as there's an orderly exit from the theater, or we all stay in our seats, then we're all going to be OK," Valentine said, referring to the market. "What we don't want is everybody to do the same thing at the same time, which would be to bail out of stocks."
For four years the market has been on a moonshot flight, ignoring warnings that stocks are over priced. The market, however, has managed to avoid the "Big Selloff" all of these years. The reason: People have held onto their stocks.
But there has been a dramatic change in the bull market's personality since the Fed started raising interest rates.
The once mighty US dollar has fallen on hard times. While corporate earnings are expected to be good in the third quarter, the numbers will be stacked against a lousy third quarter in 1998, which will make them look better than they really are.
Also working against the Street is the recovery of overseas markets, which has robbed the United States of its reputation for being one of the few great bull markets on the globe.
The proof: Japanese mutual funds were the biggest gainers in third quarter as investors piled into the group amid the perception that Japan's economy is crawling back to life after nearly 10 years of no growth.
The interest-rate story has completely turned around.
A year ago, Wall Street was toasting the Fed's steady interest-rate policy. But now, the master mechanics of the economy are in an interest-rate raising mood, which could further destabilize the market.
Interest-rate increases are one of the few things that can stop a roaring bull market in its tracks.
Valentine said Greenspan and his dozen regional bankers have too much power over the stock market and the retirement goals of millions of Americans.
"The central bank should be stripped of its right to set interest rates as a policy," he said. "It should not be a committee decision. Putting too much power into the hands of a few people, and ultimately onto Greenspan's shoulders, is inconsistent of what's in the best interest of a free market economy."
The bond market, he said, can determine interest rates more normally and efficiently than a bunch of bankers.
Valentine said Wall Street is caught in an "almost perverse obsession" with Greenspan, who is constantly hunting inflation and gunning for preemptive interest-rate increases to keep the economy from over-heating.
"It's become a ludicrous practice," Valentine said. "But the ultimate harm is that when the market pays too much attention to the Fed, at the exclusion of other important things, it makes itself vulnerable."
Other commentators also agree the Fed board should stop messing with financial markets.
"For myself, I favor a more modest and open Fed, with less of an inclination to dominate the financial news," said Louis Rukeyser, publisher of Louis Rukeyser's Wall Street newsletter and host of the financial television program "Wall Street Week."
"And, most of all, I'm convinced that considerably more humility would be justified in place of the silly and potentially dangerous hubris that tries perennially to tell the stock market that government bureaucrats know better than the market does, itself, the proper level at which it should be trading," he said. "But don't hold your breath."
Who is fueling the market's volatility.?
"In part, it has to do with this day-trading phenomenon, which has made some people rich but it's also made a lot of people poor," said John Geraghty of North American Equity Services, a consulting firm. "The truth is that there are more failed day traders than there are successful ones."
In day trading, people plop down several thousand dollars and they are handed a brokerage house's "technical trading secrets." But usually, the firm's secret recipes, which are supposed to crank out profitable trades, are no better than anybody else's technical secrets.
With the traders coming into the market basically using similar technical indicators, it's a sure thing that they will generate tremendous volatility in the market.
"Volatility is basically a good thing for the market, but when the swings become too aggressive, they become dangerous for stocks because it forces people to look to other investments," Geraghty said.
"Most investors are willing to accept a degree of market volatility, but if they start to believe that their cash will be at risk, then at some point, prudence will dictate a flight to safety into bonds or money funds," he said.
Copyright 1999 Reuters Limited. <<
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