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Strategies & Market Trends : Tech Stock Options
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To: ViperChick Secret Agent 006.9 who wrote (51583)9/5/1998 12:43:00 AM
From: Gersh Avery  Read Replies (1) of 58727
 
From Henry on the currencies thread

#reply-5673307

Don't know what he is expecting, but it doesn't sound good.

Steve, over on the IT thread pointed out something to me ..

Borrow yen from a Japanese bank at say 1.75%. Convert the yen to dollars. Invest the proceeds into the US stock market ..

OK .. works as long as the yen is dropping and the US stock market is going up. But when things reverse ..

Figured out that dead cat bounces combined with perma-bull trading concepts are probably responsible for inverted bond yield curves. Short term traders dump stocks when market is falling and put the proceeds into short term bonds. The short term bonds then get sold off when the next dip in stocks is perceived to "buy the dip." In a bear market, each round the short term traders have less and less to put back into short term bonds.

Also figured out that dead cat bounces are almost required. Shorts have borrowed stock to short .. the owners of the stock figure out, to late, to sell. When they sell the short has to cover .. bounce .. until more longs can be found to borrow from.

OT *******

Got a new toy to play with .. Speech Recognition software ..

If you start seeing long posts from me you'll know what happened <g>

Gersh

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