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Strategies & Market Trends : Rande Is . . . HOME

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To: Rock_nj who wrote (5801)	4/20/1999 1:57:00 PM
From: Rande Is	Read Replies (1) of 57584

Remember the "All percentages are not equal" quiz that we had a few months back? Well, today is the perfect time to show examples of how this dynamic works. Yesterday, many Internet stocks dropped sharply. . .many fell over 20 percent. Today they are up, but have much farther to go to return from where they came. I will show you what I mean. When a stock is at 100 and it falls 20 percent, it goes to 80. When it rises 10 percent, it only goes to 88. Even a 20 percent rise only takes it to 96. A stock that falls 20 percent one day, must rise 25 percent the next to be where it was before the fall. So do not be deceived about what you are seeing. Yesterday's declines will take a VERY MAJOR recovery to get back to where they traded prior . This is why we don't hold them. Some rough examples: ATHM fell 18 pct from 144 to 118 . . . . . .now up 11 pct to 132 DCLK fell 25 pct from 139 to 104 . . . . . .now up 23 pct to 128 AMZN fell 16 pct from 188 to 158 . . . . . .now up 7 pct to 170 SEEK fell 25 pct from 60 to 45 . . . . . . now up 11 pct to 50 CNET fell 28 pct from 120 to 86. . . . . . .now up 17 pct to 101 INKT fell 25 pct from 119 to 89 . . . . . . now up 26 pct to 112 Must still rise another 6 percent to return to 119 EXDS fell 24 pct from 81 to 61. . . . . . .now up 21 pct to 74 AMTD fell 30 pct from 125 to 87. . . . . . now up 24 pct to 109 LU fell 8 pct from 58 to 52. . . . . . . . now up 4 pct to 54 This is why we sell. We can actually make BIGGER percentages by re-buying and riding back up to old highs than if we had held through. Many mutual fund managers understand this. . .that's why they jump out, then back in. . . those that hold thru miss out on that extra 5 percent or so per issue. Class dismissed. . . <vbg> Rande Is

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