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Strategies & Market Trends : Waiting for the big Kahuna

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To: GROUND ZERO™ who wrote (31823)	10/17/1998 10:39:00 AM
From: Tommaso	Read Replies (1) of 94695

I have been back studying Fosback. His arguments and tables for the "two tumbles and a jump" seem convincing, but when one looks at his chart for discount rate cuts by the Fed from late 1929 to 1932, the picture is less convincing. Over that period, as we all know, the stock market declined 90%. During the period there were eight successive discount rate cuts by the Fed. That would be seven successive "two-tumble" moves, none of which stopped the collapse. So while I am prepared to see my BEARX temporarily worth a good deal less than the capital I've put into it, I am going to stay put in that position. The overvaluations are just too glaring to warrant getting left behind when the real slide begins. It's true that for some indices the market has been down already close to 40%, but for the Dow to be down even 25%, it would have to touch 7,000. No doubt there is still as much emotion as logic in my views. If I were really cool-headed I would have added that final 15% to BEARX last July instead of Thursday. But if I can manage to be at least 50% logical I guess it will turn out all right.

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