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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: mister topes who wrote (7992)	8/22/1999 11:21:00 PM
From: Alan Bell	Read Replies (3) \| Respond to of 15132

For the case where a person wants to short the market, Bob's comments seemed to be suggesting that one should use QQQ for stocks/funds in the Nasdaq and SPY for the stocks/funds in the S&P. Clearly, one wants to hedge the Nasdaq stocks/funds with QQQ. But would it be better to use QQQ for everything. The QQQ has a higher beta allowing one to hedge an equal amount of S&P like stocks with a lower amount of money. If there are higher interest rates, multiple compression will hit QQQ stocks more. Investors in QQQ stocks are more likely to be margined/overextended and be forced to sell if there is a decline. In October '98, QQQ was hit much more than S&P. And cyclical stocks are mostly in S&P and they are likely to hold up better in the ending stages of the bull. So QQQ is likely to decline more than 1.6 (its beta) times the decline of the S&P. Wouldn't QQQ be a better choice for hedging than S&P? Any thoughts? -- Alan