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Strategies & Market Trends : The Art of Investing

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Dec 1 4:00 PM EST

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To: Waldeen who wrote (22)	9/2/1998 2:23:00 PM
From: Sun Tzu	Read Replies (1) of 10655

It is premature to start investing in value stocks now. This has been (and still is) a big cap growth market. To be sure this trend will change, but it takes many beatings by the market to change the prevalent mind set. The market momentum forces people to sell the underperformers and buy the high performers. Since the value stocks have been underperforming, you should not be surprised that they are the first in the line of sacrifices. The verpriced big caps will continue to bounce up quickly on good sentiments as people who remember them at significantly higher prices begin to precieve them as great bargains at current prices. Value stocks will begin to perform when market participants begin to realize their bargains where not such bargains after all. This process takes time. If you want to play the bouncing game (and it is a dangerous game to play) then your most profitable bet is to buy the big boys on the bottom, sell out of money covered calls on them (with say 1~3 month time span) and sell your stock when the market starts to fall again (leaving your call naked). Anyone cares to comment on this proposal? ST

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