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Technology Stocks : Intel Corporation (INTC)
INTC 50.59+4.9%Feb 6 9:30 AM EST
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To: Paul Engel who wrote (4761)11/3/1996 8:09:00 AM
From: cody andre   of 186894
 
Outside (exogenous, economists call them) factors are hard to predict.
My entire point though, is that there is so much faith that nothing can go wrong and markets will correct only a few percentage points during selloffs that it does not leave much room for errors.

Recently, I was talking to some people at the proverbial cocktail party and I was told that they were NOT invested in the stock market:
they were in mutual funds ...

The so-called sector rotations are fallacies based on synthetic investments such as listed and unlisted options, indeces and sub-indices. In Intel's case, we have listed options, e-flex options, listed and unlisted warrants; indeces: semiconductor (SOX), Morgan Stanley Tech (MSH), NASDAQ 100 (XOC), Pacific Tech index. The major players assume that hedging with these instruments will guarantee against potential options. We all learned in '87 that for these hedges to work as defined by computers there MUST be willing participants on both sides of the trades.

To make matters worse, professionals are playing these on thin margins (2-25%) which can make the unravelling even worse. After-hours trading is another problem as one can establish next day trading prices during the previous afternoon by selling or buying large blocks of a stock and change perceptions.

Just a few thoughts.// CA
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