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To: StockHawk who wrote (25396)	5/26/2000 3:18:00 PM
From: Mike Buckley	Respond to of 54805

StockHawk, I wrote: life is too short to be worrying about your investments and that the solution is to minimize or eliminate your investments in high-tech stocks. You wrote: the timing of the above statement is not the best. Thanks for catching that and putting it in context! It's your kind of leadership that brings out the value of this forum. I wouldn't want anyone to interpret my statements as a reason to sell right now. That's something that individuals need to decide for themselves. Instead, I wrote that thinking (but not stating) that people really do need to look inward and examine their capability for happily dealing with volatility. Moreover, if people take the time to examine my posts in the roughly 15 months this folder has been in existence, I've written about the subject of volatility and people's quotient for dealing with it while stock prices were going up, not just when they were going down. It's easy to forget in months like these that a lot of people get very unnerved when a stock has become really high, wondering if it is going to crash any day. For those people, the times of high prices are almost as difficult in a different sort of way as the times of lower prices. It's that context for which my statements about the ability to deal with volatility were intended and I'm grateful that you caused me to clarify that. I also want to be very clear that I'm not suggesting that people having a tough time dealing with volatility should hold right now. If Qualcomm goes down another 25% (see my next post), the people for whom volatility truly gets in their way of enjoying life might be upset that they didn't sell at today's price of $65. Trust me when I say that volatility of this magnitude is adversely affecting many people that way. Though I refuse to make any recommendations about the right thing to do for anyone other than me, I have no problem saying that I firmly believe Qualcomm will be selling at much, much higher prices years from now. I believe that so much that if Qualcomm goes down another 50% it won't matter to me, except that I'll be a buyer even if I have to sell other stocks to do it. (Caveat: for those living under a rock :) I own a long position in Qualcomm and hope you never make an investment decision based on anything coming from my keyboard.) The point is that volatility doesn't affect me emotionally in a negative way. Just the opposite, I love volatility because stocks are just as volatile on the upside as the downside, if not more so. I thrive on the long-term trends of volatility I expect to see in the coming years. But everyone doesn't react to volatility the way I do and I always want to remain sensitive to that. --Mike Buckley

To: StockHawk who wrote (25396)	5/26/2000 3:59:00 PM
From: areokat	Respond to of 54805

"I remember being upset after the 1987 stock market crash." Me Too. I didn't get out of the equity market until a couple of years later but I remember all of the Business Week, WSJ and Barron articles and they weren't helpful at all "I was so upset I largely sold out" I bet if this thread had have been in action you wouldn't have sold out. Lots of threadmates are being helped through difficult times right now. Tom

To: StockHawk who wrote (25396)	5/26/2000 9:45:00 PM
From: ratan lal	Read Replies (1) \| Respond to of 54805

I'm sure you know the story about the young couple who saved for years to buy their first house in a nice neighborhood. They spent almost everything they had and got a big mortgage, but they also got a beautiful $250,000 house. The house was worth every penny they paid for it, and they were happy. After a month of living in the house someone rang the front door bell and offered them $240,000 for the house. They thought this odd but largely forgot about it until two weeks later when someone else came to the front door and offered them $225,000. A week later when someone else offered $195,000 they began to panic, and then recently yet another person offered $175,000. Unable to deal with fear and emotion, they sold. U forgot to mention whether they could pay the mortgage and continue to pay in the foreseable future. I knew many people who 'gave up' their houses in the 1990' as prices kept dropping even below their mortgages and future income was uncertain at best. Similar situation may occur in the amrket if one has 'margin' and cant meet margin calls. Or if one 'expects' market (or stocks held) to fall substantially due to bad news (or perception) as is happening to QCOM right now. Investors are losing thousands every day and only 'good and unexpected' news will stabilize or move it up. I am hoping China will finally decide on QCOM and korea will continue to permit free phones. Of course widespread use of wireless data will also do the trick. Just ranting as I see my portfolio of QCOM, GMST, ITWO, CSCO evaporate.

To: StockHawk who wrote (25396)	5/26/2000 10:03:00 PM
From: mauser96	Read Replies (1) \| Respond to of 54805

There's been a lot of talk on this thread about LTB&H, so I thought some hard data here might be useful. I'm re reading a book "Fractal Market Analysis" by Edgar E. Peters and this comes from that source,page30. The Sharpe ratio is one showing the amount of return per unit of risk or standard deviation.The higher the ratio, the less the risk (by this methodology). The author studied this for a 100 year period ending in 1990 for the Dow Jones Average. For periods of 1 day to about 1200 days there is a slight but steady decline of the Sharp ratio, with the average being somewhere around 1.14 or so. After 1200 day periods the ratio starts to increase.. The real surprise is 6500 days where the Sharpe ratio reaches 4.62. As an example, going from 65 days to 6500 days, decreases the risk by more than 400%. Going from 65 days to 650 days decreases risk by about 9%. Long term investors are rewarded better per unit of risk. The figures are a bit erratic because of the "short" time span, but what it shows is that for long term to really substantially reduce risk the holding term may have to be many years. One should also keep in mind that the DJI has not stayed static during that time. Stocks have been dropped and added. However I suspect the methodology of choosing stocks for the DJI hasn't changed a lot. They want leaders that are mature companies in important industries. I would suspect that the same effect would be true with a gradually changing portfolio of gorillas. An interesting part of the chart is that the Sharpe ratio tends to be a bit higher for periods of 8 days or less than it is for periods of a few months. This could be because the market has "memory" of past events , but the "memory" doesn't last for long. BTW, this book is fascinating reading for students of market behavior.

To: StockHawk who wrote (25396)	6/2/2000 1:56:00 PM
From: StockHawk	Read Replies (1) \| Respond to of 54805

>>Now is the time to strengthen our resolve<< Just thought I would follow-up on something I posted exactly one week ago. I suggested that if tech volatility was causing anyone to consider reducing their tech exposure, that it was probably not a good time to be selling tech stocks. In the four trading days since then most of the stocks we watch here have risen quite a bit. While we have a very long way to go, at least we are off the bottoms right now. While I'm not suggesting that anyone bail out now, if you were close to capitulating a week ago, at least now you can look over your portfolio in a slightly better light. It is generally best to trim on strength. No one knows if this recent rally will continue. On the positive side we have continued favorable economic reports coming in revealing a slowing economy. Also, market volume is rising on up days and many more stocks are rising than are falling. I saw one comment yesterday that there was "panic buying" by some who did not want to miss the upswing. On the negative side, this upswing happened very fast and profit-taking could come in at any time. Plus Greenspan could ignore the evidence and, you know. StockHawk

To: StockHawk who wrote (25396)	8/25/2000 1:01:18 PM
From: StockHawk	Read Replies (5) \| Respond to of 54805

"Exposure to the core contributors of the G&K thread really helped keep us on a level emotional keel during those dark weeks when the NASDAQ just would not stop dropping." I received the above in a PM (quoted with permission) and it reminded me that I wanted to take a look at the market's recent dark days to see if we could learn a lesson or two for next time. Since this had been the first real taste of a bear market for many new investors, some may not realize that many patterns repeat again and again. When the next one comes around (and it will) perhaps we can be better armed to deal with it. The thing that irks me the most about market downturns (besides seeing my portfolio's value shrink) is the number of snakes that come crawling out predicting doom. It happens every time. Get some market weakness, see some widespread concern and fear, and the doomsdayers will appear. On TV, on message boards, in the newspapers. They predict with great certainty that this is the end. The good time are over - they were just an illusion anyway - and now the day of reckoning, which is at hand, will be severe. Seemingly smart people draw parallels with 1929 and other dismal periods and gloatingly say ‘I told you so'. It's amazing that anyone can keep their heads. The trouble with these predictions is that they appear to come true. A markets is down 20%, someone calls for another huge fall and a day or two later the market is now down 22%. Oh my, it IS happening. More join the dark side. Outpourings of grief and despair abound. The only safe thing to do is sell, they say. That is why so many people do sell at the bottom. Now I am not saying that every prediction of a market drop is wrongheaded, or that some sectors can not get wildly overvalued. Clearly people investing in money-losing, illogical-business-plan dot coms needed a wake up call. But for people who invest like we do on this board, in quality companies with strong fundamentals, rapid growth and significant earnings, reasons for real panic are rare. The post I addressed this message to was one I wrote on May 26 (#25,396) just about the lowest point for the NASDAQ. In that message I suggested that people NOT sell. I suggested that if the weightings in your portfolio were troublesome, that is, if you thought you had too much exposure to high technology, that was not the time to sell. In hindsight, that was pretty good advice. The time to rebalance portfolios is when you can think clearly, not when the sky is falling. The market is not back to a top and a number of our stocks are below their highs, but for the most part, our stocks are well above the lows. Getting through this period in the market was difficult. But if we can remember it clearly, perhaps next time will be a bit easier. StockHawk