OJ, I didn't even trade a single share by 1987. Obviously you are a veteran trader than I am. But, that doesn't disqualify me from disagreeing with your opinion, does it? Perhaps the worst lesson 1987 crash ever taught people is to buy dips, any dips. Sure, in a secular bull trend dips are a correcting mechanism, not a bear trend by itself. But, the markets did not start at the advent of this bull leg in 1982. If you wish to follow history before 1987, there were protracted periods of time in which stocks were universally hated and for a good reason. Each time, you got there soon after an euphoric enthusiasm for stocks, much like the one you have displayed in your note. In 1987 the eventual problem for the big drop was supply and demand (for stocks), magnified by portfolio hedging. 10 years later, now that many more people have exposure to stocks, the same supply and demand equation is heavily weighted towards, supply. [I will post numbers later.] You turn-around and yell SELL, the echo will be "Sell to whom?"
You are telling me that a lot of people have amassed so much wealth even since April of this year that they can afford to burn it. If you want to burn it, why earn it? Before October 17th there were at least 5 swings of 300 points or more on the DOW. I pressume a lot of dip buyers have bought them. Some might have made moeny but I bet many would have lost it due to the unexpected Asian mess. It is very common to make money fast, very fast at the final gasp of the bull. But only a few people can keep it. I hope you are one of them.
BTW, I turned fully bearish in July. Unlike many people think, I am not a perma-bear. I play the bull game too. My biggest (long) winners this year were drug stocks. Specifically, Warner Lambert and BMY. I bought WLA LEAPS when it was in low 80's and sold at ~137! Check out the WLA chart on SI, in case you are wondering!
Good luck.
-Mohan |
