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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 671.91

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Nov 14 4:00 PM EST

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To: Gersh Avery who wrote (9336)	3/28/1999 11:52:00 AM
From: Casaubon	Read Replies (1) of 99985

I wish I had the ability to choose cash in my 401K. The safest I can manage is a fixed income fund. Although I don't foresee interest rates going through the roof, I do think it is possible to get the tyx.x to 6.5% over the next 12 to 18 months. At least in this scenario my funds won't be taking a 25% hit. As far as I can tell, based on all my 401K funds performances over the last 6 months, this market is priced to the max. That is not to say some stocks won't go higher. There will be a few strong performers. For example, I would never bet against microsoft! They may some day be the monopoly the gov't fears. The question then, is what to do with the risk capital? My opinion is to find a company you are happy with and protect your investment by writing covered calls against it. If you're lucky, you get called out. If you are playing the nutz, buy some puts on the run-ups. Last of all, it's not important whether you are bull or bear, only that you don't lose your nut. These are choppy waters, so protect your investments, even if it means limiting your returns.

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