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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: donald sew who wrote (31788)	10/3/2000 12:39:29 AM
From: donald sew	Read Replies (3) \| Respond to of 42787

I normally try to stay away from the subjective, but the VIX has been bothering me. The VIX is at 23.43 which implies that there is not alot of fear. This is OCT, which has been noted for its negativity. But the fear is not showing up in the VIX. Althought the NAZ was down strong the DOW was up. Is the market saying "yeah we know OCT is a bad month, but once OCT is over, the market will just set NEW HIGHs as it did in 1998 and 1999. And if things do get bad, GREENSPAN will just cut the rates and save the market" If that is what the market really thinks, thats a bit scarey. I spoke to a friend who I would categorise as J6P. With the recent market he told me that he lost $250,000(25% of his total portfolio). He has no investments in HiTECH and the most of his money is in mutual funds and regional banks. I asked him if he was doing anything to at least hedge himself if things got worse. He didnt realise that there were methods of hedging other than selling stock. When I explained to him about selling calls, his response was that he has already lost too much to take the chance that his stock would be taken away from him. At first, I did not understand that logic. Then he explained that he would lose on the recovery of the market since he would have to give up the stock at lower prices than what he bought it at. In other words - he was POSITIVE that the market would FULLY RECOVER and continue higher. It was just a matter of time, in terms of a few MONTHS, repeat a few MONTHs. He could be right, but keep in mind he was POSITIVE/ 100% SURE. Although he is worried that it could go lower, he will just not sell nor will he HEDGE. So where is the extreme fear. Sure he is worried, but he is changing nothing. He is still adding the same amount thru the 401k to the same mutual funds which are losing. Worry without taking action is not fear! Forgot to mention that he plans to retire in 3-5 years with 2 million doing the same that he is doing now. Interesting. Does that sound like complacency. And I know plenty who fall into that same J6P mentality. Scarey - remember the market does what most expect it to do!!!