All Clowns Must Be Destroyed Message Board

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Pastimes : All Clowns Must Be Destroyed

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To: cfimx who wrote (15538)	3/8/2000 1:03:00 PM
From: pater tenebrarum	1 Recommendation of 42523

twister, there's a special situation here i believe. the vast increase in margin debt over the past few months and the big inflows into tech funds in Jan/Feb are an indication that everybody is actually fully invested at this point. so it would probably not take much to topple the house of cards. as i have mentioned here before, in '87 only 3% of the invested capital actually left the market...the problem was that they all got the idea on the same day. i remember one of the Fidelity funds put in sell orders of about 2 bn. dollars on the day of the BK. that's all it took. right now the mutual funds have virtually no cash reserves. so where is the money going to come from to stop a fall? there's a pool of highly flexible ST traders money and there are shorts that could be induced to cover, but otherwise there seems to be limited buying power. note that trimtabs has diagnosed a liquidity deficit in spite of the huge inflows, as new offerings and insider sales proceed apace. therefore the entire rise in the NAZ can be attributed to margin debt. that's a dangerous situation... it's not necessarily selling that kicks off a waterfall decline...it begins in most cases with a lack of bids.

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