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Pastimes : Ask Mohan about the Market

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To: Rational who wrote (8989)	11/22/1997 5:25:00 PM
From: Joseph G.	Read Replies (1) of 18056

Sankar, if all world stock markets drop 30% one good day [-g-], I think option sellers' losses will be one of the "minor" problems. The Cambridge guy guessed at total OTC stock options as ~$300B of underlying, which is not very little, but not a lot. IMHO, it is surprisingly little. Shows tons of complacency. But, nobody really knows how much is there in OTC contracts. "Real time hedging" can sure drive markets, though they have "circuit breakers" just to shut off such activity. Just a regular old-fashionned panic is also possible. Or, there is no reason why a one month (as opposed to one day) 30% drop should be very pleasant to bulls, either. The simple truth they don't want to face is that ther is no reason to buy overpriced stocks now, no matter what will or will not be in 10 years or 30 years. It's all a delusion. Joe

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