Bill Wexler's Profits of DOOM Message Board

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Strategies & Market Trends : Bill Wexler's Profits of DOOM

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To: Mama Bear who wrote (3101)	9/28/1998 12:37:00 PM
From: drakes353	Read Replies (3) of 4634

Barb: I may just be suffering from the average investor's sell the bottom buy the top syndrome. Don't know about you but I think the toughest thing about investing is avoiding the "decision making based on most recent experience" trap. But it is my analysis that the market is not bottomed, and that the chickens are still coming home. I believe we're entering into a period of asset deflation, and most folks are so tuned into inflation that they don't realize what a deflationary environment could do to asset values. I disagree. Deflation is the new boogie man. Everyone but the Fed has been talking about it for months and months and months. Always best to ignore what everyone else seems to be worried about. Perhaps I am wrong, but I have been paring my long exposure since the S&P first hit 1000. I have been buying 10 year treasuries since the long bond was at 6 1/4%. My trading account and my short positions have excelled this year. It really would take an explosive rally to cause me to underperform the S&P this year by sitting in cash at this time. The potential danger in that kind of thinking is that you'll see a pile of great longs run away from you. If a DELL doubles again in the next 6 months will you be able to bring yourself to buy it? I have decided that I would regret staying in the market more if it crashed and took 20% of my capital than if I stay in cash and the market rises 20% from here. That's normal, it's called an asymetrical risk/return profile. A 20% return is "OK", a 20% whack is a disaster. Almost everyone thinks that way. This century I think there have only been two times where a 20% whack was followed by an additional 20+% whack ('29-'32 and '73-'74.) The other 20% whacks were followed by rip snorting bull markets. I admit that I am still something of a market rookie, but we all have to decide our own risk tolerance based on what each thinks will happen. OK, fair enough. One thing though, how will you know your thesis is wrong? Regards, drakes353

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