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Strategies & Market Trends : Roger's 1998 Short Picks
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To: Alias Shrugged who wrote (8433)5/6/1998 12:17:00 AM
From: Oeconomicus  Read Replies (2) of 18691
 
Mike, good points. I neglected to offer reasons for the beginning of a decline, focusing only on how 401-k investors' attitudes might change in the event of a decline.

Higher margin requirements could contribute. A selling climax in the larger Asian markets might draw some cash back (bargain hunting, margin calls, liquidity crisis, whatever). There might even be a few money managers out there brave enough to hold cash. Remember, even if 401-k participants keep putting money into stock funds a little longer, the amount of the portfolio held in cash is still somewhat discretionary. We are at 4.7% now.

Bob

PS: "Vaporized" is another possibility. We sometimes forget that stocks are priced at the margin. They can be "repriced" overnight (see Cendant) and POOF!, wealth evaporates. A relative few shares change hands at lower prices and suddenly everyone is poorer.
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