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Strategies & Market Trends : Waiting for the big Kahuna
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To: Brad Bolen who wrote (27247)9/10/1998 5:03:00 PM
From: James F. Hopkins  Read Replies (2) of 94695
 
The big war is in the Futures pits right now, stocks are just
doing a reflection of that. This spike up while not as strong
as last Fridays close has the same ear marks, you'l know in
the morning if she gaps up. Seems it's been going from bull
trap to bear trap, back and forth a lot lately.
Also there are more fronts to the war than meet the eye.
As meanwhile the big arbitrage players are writing both sides of
the street and cleaning up on high premiums, they really stay
market neutral and just short or go long in a way to close
their positions, while collecting the premium on the other
side. The more volatile the market is the more they make.
In the long run the cost of it all winds up as a hidden charge
against the value in a stock, so the longer term effect of all
the speculation is a negative one for investors. That's why
I opposed the cut in capital gains tax last year, as I knew it
would bring more of this on.
Jim
Ps If a share is traded often enough in a certain time frame,
the cost of that trading can exceed the ability of any company
to earn enough profits to off set that cost; which is for
all practical purposes an expense, even though it's not recorded
as one. It effects the intrinsic value that the share can hold.
Unrestrained, cowboy type capitalism will make it's own coffin.
Jim
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