VOLTAIRE'S PORCH-MODERATED Message Board

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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED

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To: stockman_scott who wrote (35489)	4/8/2001 2:00:21 PM
From: t2	Read Replies (2) of 65232

Mutual funds that ``short'' the market, an easy way for individuals to profit from market declines, have posted big gains in recent months, as stock prices have declined That is a very interesting quote from that article you posted. Do you know what happens when people put money into such funds? It may be the signal for the end of the bear market. People are going to dump money into such funds while those that were already in there are going to jump out to regular funds. Of course retirment accounts will still go into the regular funds. The sentiment is just so bearish that one has to think that the bear market is over. Stocks may get very hard to borrow in order to short. Short interest has been climbing and I bet has this month as well. Does anyone remember what happen to Rambus about a year to 2 years ago. The stock took off because the shorting on this one had gotten to such a large amount. Something to keep in mind as interest rates drop. I see extreme bearishness among the retail traders (nasdaq 1000 seems like a sure bet to many). This seems like Naz 5000 but except it is 180degrees in sentiment. One has to continue to watch this. I am not saying Naz won't decline further but there is a good chance that mutual funds are sitting on a lot of cash even after redemptions. Funds generally keep more than enough cash for redemptions (just in case). Once we get out of that stage, lookout! I am not even convinced that Janus is seeing huge outflows relative to their cash levels. If my hunch is true, we will have one massive rally and a lot of shorts are going to get hit along the way. Remember there are many mutual fund holders that don't like to sell mutual funds when they are down so much...will keep hoping for a rebound in tech...unlike retail traders who got hurt with margin.

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