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Strategies & Market Trends : The Stock Market Bubble -- Ignore unavailable to you. Want to Upgrade?

To: prosperous who wrote (3167)	5/14/2000 4:50:00 PM
From: Tommaso	Respond to of 3339

I am doing this in a way that isn't like a conventional short seller in that I am pursuing a "sell and hold" policy. My belief is that the overvaluations, especially of tech stocks, are beginning to be recognized. Because of its diversification, XLK moves up in gradual steps so that you can see how much trouble you are getting into. If the markets head back up I will simply hold on, adding margin as necessary. I can keep this up almost indefinitely. If I ever should short an individual stock, I would place a stop loss only a point or two above the place I shorted it. I don't think I will ever do this, though. My strategy is essentially that recommended by David Dreman a few months ago. You have to have a lot of cash and a lot of confidence to pursue it, however. I will seriously start to think about closing the position when and if the price drops below 30. Meantime, the interest I am earning from my money market account and bank account strengthens my position. Depending on how the market, the dollar, and the economy look, I might just maintain the position longer, especially if interest rates are high enough to give me a good return, thus postponing capital gains. In that case I might establish a stop-loss cover a few points above where I make that decision. If the market goes up 100% fast, I will be in trouble, of course, but that hasn't happened even in the most frenetic moments. It struggles up and with every step becomes more set up for a really precipitous decline. I am not trying to trade the shorter fluctuations because I might miss the whopping decline that I expect.