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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Oblomov who wrote (25732)10/8/2000 10:55:12 PM
From: Perspective  Read Replies (2) of 436258
 
Yes, all the positive feedback in the system works equally well to the downside as it did on the upside. The only thing that stops the feedback on the downside is a valuation floor where stock cash flows become competitive with treasuries.

I'm watching the drop in Intel with extreme interest right now, since Intel *IS* the employer in Washington County, Oregon. I've seen that stock option money flowing into ridiculous $500K McMansions on the West Hills, replacing what used to be nice forested land. (There will be some silver lining to the crunch.) High-end real estate should take a really big knock in the absence of stock option sales.

One effect to consider is this: everyone I know that has options always wants to exercise at a price above their previous exercise. Therefore, even though many of the Intel options are still far in the money, the exercises will dry up because people will await new highs to execute.

BC
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