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Strategies & Market Trends : A.I.M Users Group Bulletin Board -- Ignore unavailable to you. Want to Upgrade?

To: Steve Grabczyk who wrote (9897)	1/8/2000 2:33:00 AM
From: steve in socal	Respond to of 18928

hey s.g. i have trouble believing anything someone with the name pierre is touting. statistics are a wonderful thing leading to endless hours of debate as to what the hell they really mean. a hundred years from now, if the next five 0 ending years go 5 up and 5 down, the statistic will be 12 out of 20 and our great, great grandchildren will be wondering like us today what the hell it all means. i think mr. greenjeans will rock the boat during the first half of this year because he knows he won't be able to in the second half of an election year. i think it will be a very rocky first 6 months in the tech sector and we'll see more weeks like this last one. but tech ain't going away and like an article i read suggested, name another industry that will grow as much as tech in the next few years. so i expect that we'll all be looking at another fall like this last years and won't that be fun! of course, as its been proven many times on this board, i probably don't know what the hell i'm talking about! nighty night in newport beach

To: Steve Grabczyk who wrote (9897)	1/8/2000 8:58:00 AM
From: OldAIMGuy	Read Replies (1) \| Respond to of 18928

Hi Steve, That fat margin expense is a bit spooky. Guess the brokers at the DayTrading salons should begin to wear Kevlar vests to work again. As we've seen in recent history, if someone looses lots of money in the market, they're going to blame the brokerage, not themselves. There is something to the "weak hands" idea. Long term investors usually don't run for the exits during a fire sale like this week's. However if someone is trying to make a killing on a 1/4 point spread, guess how long they'll hang around on a NASDAQ down draft day like Tuesday! It's also been proven that "Stop-Loss" orders don't offer much protection since they don't guaranty at what price the sale will occur. It would appear that AIM users are probably in the best position to benefit from a downturn of any kind since, if we're staying close to Mr. Lichello's model, we should have plenty of Purchasing Power as well as Staying Power. We borrow from ourselves to make AIM Purchases. There's a "cost" of the loss of income from the money market fund, but it's no where near the expense of maintaining a margin account. Something else happens many times when there's been a rash of speculative activity - the market sometimes just goes sideways. Earnings have to play catch-up for a while, so the market churns about until there's a clearer direction. I went back to the Value Line description of their P/E ratio that I use in my Relative Valuation component. They state something like "the average P/E of all stocks in the group that have earnings." In other words, since Amazon doesn't earn any money, they aren't factored in. Also, it doesn't appear that their P/E is "weighted" in any way to account for the capitalization of the individual components. It's interesting to consider that if each of the DotComs earned just one penny, they would then be factored into the Value Line equation! That could drive it through the roof! Maybe we should hope that they NEVER earn anything!! :-) This may be why I've seen recent declines in the P/E of Value Line while we've seen massive runs in some stock prices. If those companies aren't yet earning money, they are being ignored by VL. It would appear that I'm measuring those "boring" companies that just earn money! A flaw? Maybe, but this particular component of my Idiot Wave has tracked market moves more consistently than any of the rest. Right now it's a bit to the low side but if Mr. Greenspan raises rates by 0.5% it will be back in the middle of its "Neutral" range. Again this time I think the Idiot Wave has been a good guide. It coached us to let the Cash Reserves fall to about 40% for stocks last year and then started to rise back to its current 51% level as Speculation and Divergence forced their opinion on the IW. At first glance this might not seem like much of a move, but as far as asset allocation models go, it's a big shift. It's been three weeks since the IW first signalled High Risk. I think it was well timed. It's been several months that we've watched the IW climb from mid-Average Risk to its current level. Looks like we had plenty of warning. I don't get nearly as concerned by the IW's High Risk estimate as when all four components are in unison. That doesn't happen very often and isn't the case now. However, it's good to keep an eye on things. Thanks for bringing the "Oh-Oh" article here for consideration. Best regards, Tom

To: Steve Grabczyk who wrote (9897)	1/8/2000 5:36:00 PM
From: fuzzymath	Read Replies (1) \| Respond to of 18928

Interesting Steve, and almost convincing, but... There does seem to be a pattern exactly of the type I try to hone in on with my methods. But 7 out of 10 samples is not a necessarily really significant statistically. Still, the Government does make the entire year-transition period very subject to unusual behavior by investors to to potential tax savings and penalties. It would be nice to see this study for all years, not just the years that end in 0. If the cause is taxes, then you'd expect to see these early highs in quite a few bearish years. It's the "years that end in 0" that bothers me. Why? What's the underlying fundamental reason for this to happen? One can note that in all election years ending in 0 except 1980 the phenomenon happened. So, maybe is there greater uncertainty in years when a presidential election is occuring? To know this, we'd have to study all years evenly divisible by 4. This indeed is a curious pattern that Peter Eliades noticed. I might spend more time on it to answer some of the above questions (if I can find the time). Thanks for showing us the article! Kevin