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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 683.39+0.5%Nov 28 4:00 PM EST
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To: RealMuLan who wrote (14861)5/25/1999 12:20:00 PM
From: pater tenebrarum  Read Replies (2) of 99985
 
Yiwu, the potential for disaster in this market is generally underappreciated. many of the most popular stocks are so-called 'crowded trades', meaning that everybody is in them, and one day they will all try to head for the exit at the same time. if the market should crash, it is even doubtful whether it will be possible to successfully hedge one's exposure with puts due to the counterparty risk. even though i still think we may yet get a blow-off before this bull market is over, extreme caution is warranted at this particular juncture. while it can be argued that some of the excesses, especially in internet stocks, have been corrected, many people conveniently forget that most of these stocks *still* trade at very high levels. even a crash that would largely center on the internet group could have dire consequences for the financial system,as many of the on-line brokers would likely be wiped out along with their customers. i suspect that the powers-that-be will do everything they can to avoid such a scenario, but i wouldn't bank on their success. the market can be manipulated to some extent, but all bets are off when panic strikes.

regards,

hb
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