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Strategies & Market Trends : Value Investing

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To: Investor2 who wrote (4990)	9/11/1998 6:26:00 PM
From: James Clarke	Read Replies (2) of 78482

I hadn't quantified my analysis until now, but I've been thinking "40% downside risk" for at least a year now. Anybody reading my posts and seeing the kind of stuff I've been recommending knows that I have been trying to avoid stuff that is market sensitive, and that about 6 months ago, I decided to opportunistically liquidate. I was wrong that the REITs would be safe, so in July I threw in the towel and took losses on most of those too. What am I saying now? Be very very careful. What I am not saying is "wait for things to clear up and look good again". If that were to happen, you've missed the recovery. What I am waiting for is a climactic sell-off that takes large cap stocks down to objectively reasonable levels. That means another 20% on the big stocks, taking the Dow down to the 6000 range. Maybe the smaller and beaten up stocks hold up OK in that phase because they are already cheap. But I'm not going to kid myself into thinking that value stocks are going to go up - they may outperform, but they won't go up, except in very special cases - until GE trades below 60. Yeah, I'm a bear. I think I was saying pretty much the same thing at the peak, so its not fear if that was your implication. Jim

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