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Pastimes : Home on the range where the buffalo roam -- Ignore unavailable to you. Want to Upgrade?

To: Boplicity who wrote (5898)	10/11/2000 9:58:08 AM
From: horsegirl48	Read Replies (1) \| Respond to of 13572

Greg does bbh or emc look good at this level? HG48

To: Boplicity who wrote (5898)	10/11/2000 10:30:09 AM
From: tripperd2	Read Replies (1) \| Respond to of 13572

A cautionary outlook from the PMCS thread-fortunately I got out at 230. The guy sounds spot on right now-curious what he was saying last fall. Echoes what you have been saying Greg. siliconinvestor.com Confessions And Cautions by Jon D. Markman: moneycentral.msn.com >> Grrrrr. Now I’ve run out of numbers, but not confessions. Here’s one more: I haven’t interviewed enough bears this year, and they’re complaining of discrimination. So in the interest of balance, I called up Richard Rhodes, a veteran private trader in Chicago who has expressed a negative view of U.S. equities since mid-March with wit, intelligence and charts in a Stockcharts.com column. Rhodes confounds the popular impression of bears as villainous cads. Scholarly and temperate, he starts with a fixed fundamental view of the worldwide macroeconomic trend (interest rates plus currencies plus the business cycle plus politics) before initiating any positions. These trends, once manifested, tend to last many years, he says. This is where the real money is made. Rhodes says he trades only when his fundamental and technical views of the market are in tandem, and right now they’re both bearish. He’s forecasting that the Nasdaq will sink to 2,800 by the end of October -- and then, potentially, worsen. The problems he sees: Slowing revenue forecasts from all sectors of the economy, higher oil prices (a tax of the highest magnitude) and a weaker euro have not yet been fully factored into stock prices. He foresees inevitable rallies that will repeatedly fail, declaring: "The bear market in the Nasdaq isn’t going to be a straight-down affair. It’s going to suck people in and continually break them down. And it will go on and on until it’s finished." Rhodes says he would avoid everything at this point, and get long cash. For those who wish to make money on the short side, he recommends sales of Anheuser-Busch (BUD), Ciena (CIEN), PMC Sierra (PMCS) and Sun Microsystems (SUNW). The best time to initiate these positions, he said, would be prior to their earnings reports. The reason: In a bear market, all news will be considered negatively. The trader says he won’t believe the trend has shifted until the Federal Reserve both lowers interest rates and enough time has passed for those cuts to filter through the economy. In addition, he said he’d have to see stocks become considered an unfavorable asset class. People are still jumping on every rally as if it’s the one that’ll take them higher, and they’re going to be wrong every time as long as the big trend stays down, he says. For those who wish to trade against him, Rhodes suggests that they at least develop and follow a strong risk-management program to take them out of bad positions quickly. The important thing is not just saving financial capital to spend another day, but to reserve your mental capital as well -- you need to keep your mind clear and confidence high, he said. He suggested that if you make 100 trades a year, expect only 40 to be correct -- and just three or four to butter your bread. Other recommendations to maximize results: Don’t put more than 10% of your capital into any one trade to start, and never, ever add to an unprofitable trade. To make the most of your best ideas, he suggests a staged approach -- putting in no more than half as much money as you’ve already committed with each augmentation. Average into good trades, not bad ones, he cautioned. To sum up, Rhodes suggests investors not turn a blind eye to risks in the market because higher interest rates beget slowing revenue growth, which leads to lower profit margins, thus squeezing earnings forecasts. Not a pretty picture when you consider that rising earnings were behind the price/earnings multiple expansion of recent years -- and a good reason to exercise caution. << Trip