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Pastimes : All Clowns Must Be Destroyed

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To: Ilaine who wrote (39057)	6/11/2000 10:23:00 PM
From: Mark Adams	Read Replies (1) of 42523

Fear and Greed drive the market? Is it fear or prudence that keeps people on the sidelines? Isn't prudence just a nice way of saying "well considered" or "justified" fear? You've identified 4 interesting 'reasons to be bullish positions', with David adding the modified greater fool theorem for a fifth. Funny, that I mentioned the demographics as a long term support to my brother just last week. I don't seriously consider that as a rational to own stocks, more of a rationale for the bull being a bit more long winded than I expected. But I had to smile when I recogonized the error of my thinking, with David's help. I see 3 or 4 kinds of risk when investing in equities. 1. Market risk- a sinking tide lowers all boats. 2. Sector or cycle risk- some periods are more favorable to certain groups of companies than others. 3. Company or execution risk- you can be in the right market with the right product and still screw up. My query was directed at the wisdom of looking at "market risk" alone as a justification to withdraw completely from equity investments. Market risk and mass psychology support caution based on a macro view of the market, IMO. But not the micro picture of individual stocks. Not all stocks are trading at PEs of more than 100. There are stocks paying dividends, with reasonable ratios. They are often ignored midcap, stable or slow growing companies. I don't see many can't miss opportunities, but quite a few reasonable prices. Barrons did an article some weeks back about how the tech frenzy appeared to be drawing capital out of the value stocks, further depressing what appeared to be good values. When the techs corrected early April, some of these value stocks got some support- which has since faded IMO. Many are still trading at recession level ratios, IMO. I have to wonder if it's rational for me to avoid additional investments based soley on the possiblilty that the market might crack further and make even better values available. Do you have entry points defined, and stocks selected that you'd like to buy as the market descends?

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