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To: Bill Harmond who wrote (101116)	4/16/2000 2:21:00 AM
From: Curly Q	Respond to of 164684

Sounds like a plausible explanation for last week's carnage. On Friday, I stepped in near the close and bought CMGI, ARBA and ANCR. The overwhelming consensus seems to be that Monday is going to be ugly because of margin selling. But if everybody thinks one way...

To: Bill Harmond who wrote (101116)	4/16/2000 3:18:00 AM
From: GST	Read Replies (1) \| Respond to of 164684

William: An interesting addition to the discussion on why now and why this much selling. That would indicate an end of the selling sometime soon. It might also indicate that those in that position are now much weaker as a market force.

To: Bill Harmond who wrote (101116)	4/16/2000 11:38:00 AM
From: Eric Wells	Read Replies (2) \| Respond to of 164684

To me this is a very interesting take. William, do you believe that the run-up to Nasdaq 5000 was due primarily to momentum investing, and now that many investors have lost a lot of money, it will make many shy away from momentum investing - and therefore result in a very long delay before we get back to Nasdaq 5000? Or do you believe that we reached Nasdaq 5000 because of value investing, and as such, we are looking at an incredible number of under-valued technology stocks at the moment? Thanks, -Eric

To: Bill Harmond who wrote (101116)	4/16/2000 2:13:00 PM
From: Libbyt	Read Replies (1) \| Respond to of 164684

>Today I heard from my CPA the best explanation/theory behind this rout. She contends the following: In 1999 the daytrading and short-term trading community made great profits in the market, most of which, because it was short term, was realized in 1999. They entered 2000 with considerable income-tax liability. However, since it is natural to delay tax payments until the last moment, this group reinvested their tax liability...< This was exactly my position. I do not use margin, and I had not bought any biotech stocks...but I was waiting until the last minute to pay my tax bill. Fortunately I had sold positions about two weeks ago to pay the bill, but it was tempting to see a large amount of cash in my account (all going to the IRS), and not think that I couldn't use that money for a few more days and probably make some money in the process. I just read another similar view of "what happened last week" posted by the CEO of CMGI on Raging Bull. Here are a few of his thoughts...the entire message can be found at this URL. ragingbull.com "It is not a simple situation. Involved are many factors, including: 1. the sharp run up in the tech and Internet sectors in the last six weeks of 1999, creating significant tax payments due April 15, 2000. 2. the amount of stocks purchased on margin, which is partly responsible for the late '99 run up, 3. too many companies going public that were not ready, 4. several unrelated events which occured within a short period of time, in particular: - Abby Joseph Cohen's comments on her lightening up on stocks, - predictions by a Goldman analyst that Microsoft would miss their revenue target, - Safeguard Scientific stating that they are done investing in B2B, - the CPI hitting .7, and - the put to call ratio hitting a low on or around March 10, which coincided with the highs of the market. (Admittedly, this last event may be, in part, what precipitated Ms. Cohen's comments.) Individually, no one of these factors was enough to cause the crash we have just experienced, but taken together, they were more than the market could bear. If I had to attribute the recent sharp selloff to one factor, it would have to be the policy of the SEC allowing clients of brokerage firms to purchase huge amounts on margin. Many firms have open policies allowing up to 100% on margin. Depending on your balance sheet, some firms allow almost 200%. This causes sharp run ups in good times and even sharper declines in bad." Libbyt

To: Bill Harmond who wrote (101116)	4/17/2000 7:50:00 PM
From: Richard Bunker	Read Replies (2) \| Respond to of 164684

William, Thanks for the great post. Taxes have been exasperating me for years now grin. The market might be keeping me up at night, but there are a few things about Amazon that I certainly know: I still like books, and still like buying them from Amazon.com, and still believe that Amazon 'gets' B2C e-commerce better than anyone else. I don't know where the market (or the stocks I own) are going next week or next month, but I am strongly confident that they are going to be worth quite a bit more five years from now than they are today. I really don't think that investing in early stage NASDAQ companies should be done with less than a one-year horizon at the very least. And as the prices often reflect value three years into the future, the stocks should probably be held for that long as well. Just my $.02. Rick.