Waiting for the big Kahuna Message Board

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Strategies & Market Trends : Waiting for the big Kahuna

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To: William H Huebl who wrote (2290)	7/10/1997 8:29:00 PM
From: Stingray	of 94695

This thread seems to be very popular today considering no major action on the street. Making real money from the elusive Kahuna seems to be very difficult. I'm putting together a "playbook" so that I can have a strategy ready if and when certain events occur. It is apparent to me that the market is at a historically high price in relation to Earnings, Book Value etc. This does not mean that we could not go higher but it seems that the higher we go the greater the chance for a fall, and the harder it is for companies to give a decent amount of money back to their shareholders via dividends and stock buybacks. Thus step 1 is to reduce my long investments which I have been doing and now only have a "core" left. For each stock I own I've set a price at which I would sell it just in case we keep going higher but it's my expectation that I'll have these left for some time. Figuring out how to play the downside is harder. Rather than keep trying to hit it I'm going to give myself one chance to try to make some money on puts with a not too soon expiration date. I'm not sure whether it's best to go with LIMPS (Long term in the money puts) or out of the money puts, but I would like to go for something that would pay off by a factor of 5 or more on a 20% correction, so I'm looking at buying puts in a corporation which has not had high price volatility in the past and which would fall around the same amount or more as the Dow. GE is a good candidate on those scores. While this thing could blow at any time I am going to wait until around August or September at least before I place my downward bet, while that is risking missing the main event I figure that if we don't correct by then the market will be even more ripe for a fall than it is now. At this stage the whole market is no more than a speculation and I figure that if I'm going to play I should just set aside an amount of money I can afford to lose and be very selective in placing that one bet. Good trading to all!

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