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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: chester lee who wrote (8751)	10/24/1999 9:31:00 PM
From: Q.	Respond to of 78661

Chester, I noticed that in the article you cited Garzarelli also likes the brokerages, including MER, because of their valuation. This brings up an interesting comparison. Elsewhere I've read that MER is trading in the middle of its historical range of multiples. Near the bottom of that range might make it more interesting as a value play, IMHO. The charts suggest to me that in comparison to the brokerages, homebuilders are much more beaten down. I wonder which of these two sectors should normally be more sensitive to anxieties about where short-term rates and the business cycle are headed. This time, at least, it has been the builders that have been the most bloodied. I did find MER useful last week when VIX hit a peak. When VIX went well into the 30's and then intraday on Monday it began to fall, I bought both OEX calls and MER equity. This was a short term play -- a bet on a bounce from a bottom. As it turned out, this worked nicely, and I was able to exit my positions with the gain I wanted by the end of the week. The previous time I attempted this I used only OEX calls, but this time I wanted to rely a little more on equity so that in case my bet failed, I would find myself owning something that would still have value after December options expiry. I chose MER as the equity in this play because I wanted a big stock that would likely bounce back with the rest of the market, but even more so. Mike, re. VIX, I have found it useful, as you mention, in short-term timing, but only as a bottom indicator for corrections. I would think that this limitation would normally restrict it to an infrequent use, but in the volatile Autumn of 1999, it has been useful several times already.