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Strategies & Market Trends : Value Investing
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To: James Clarke who wrote (9052)11/29/1999 8:12:00 AM
From: Daniel Chisholm  Read Replies (2) of 78603
 
James,

Another indication that your "short 'em all, let God sort 'em out" strategy might actually work out for you:

I am going to be a significant buyer this Monday morning, of a number of stocks that you probably wouldn't (I hope!) have very much respect for. Seems that my trading portfolio (consisting entirely of shorts and cash) has been whacked about 40% since its pre-October high point and my decision at that time to lever up my shorts in preparation for the very real possibility of a meltdown that every fool and his dog knew about. Sound familiar? ;-) Prudence now demands that I cover a bit over half of my shorts.

I've read about people suffering 35-40% drawdowns, and I've thought to myself "boy, that's gotta hurt". It turns out I didn't even know the half of it.

So am I capitulating, and is this yet another signal of the top? Perhaps. But there may yet be quite a bit more craziness to go - any time I am honest with myself, the only answer I can come up with is "I don't know". I guess when you cover your Amazon short, that might turn out to be this market's last ever buyer of fluff.... there will be no one left to short then.

I'm still going to continue to short stocks, hold cash and buy the occasional value stock (how about more of that USU, eh? ;-). It's just that I'll be doing so with a smaller capital base... :-(

- Daniel
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