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

To: UnBelievable who wrote (34314)	10/29/2000 4:01:47 PM
From: Lee Lichterman III	Respond to of 42787

Great post! As for growth rates after a bottom though, it depends on what kind of a bottom we get. If we over shoot "fair value" or at least the market's perception of fair value to the downside, you could get a faster rate of return due to the initial acceleration to "catch up" to fair value. I tend to believe that the market always overshoots and undershoots as mood swings dictate investor's perception of fair value otherwise we wouldn't trade in cycles as I believe we do. As for trying to catch a bottom and the motivation in doing so, it depends on what and how you trade. Your theory that it is too dangerous to do so is true for the majority of traders/investors. However to an option trader, getting in early has advantages as premium swings on sentiment and "odds". After all option premium is basically Black Scholles or the same equation used by insurance underwriters to determine the chances of an event happening. It is in the option trader's advantage to buy puts or sell calls when everyone thinks the market is going to the moon and to buy calls or sell puts when everyone thinks a crash is coming. A stock or index can be at the same level yet the option price can vary greatly dependent on if it is in a perceived uptrend or down trend. I fully agree with you though for stock traders as there really is no incentive to be "early" since stock prices are not anticipatory in nature and the only risk is in getting a slow fill in an uptrending market. That is a small risk compared to catching a falling knife. <gggg> As for expected market returns, well that is too complex to get into as there are many variables to consider. Dividend yields, interest rates, all come into play as well as the obvious sector choices. Your figure of 8% probably isnt too far off though as interest rates are still relatively low ( as compared to the double digit rates of the past) and the economy is still growing. I just wouldn't expect the fluff stocks to do that since they would have to trade flat for centuries to catch up to their current prices. Good Luck, Lee

To: UnBelievable who wrote (34314)	10/29/2000 4:30:20 PM
From: Les H	Read Replies (2) \| Respond to of 42787

It's a split market and split market of tea leaf readers You have the newsletter writers bearish (Consensus and Market Vane) and the newsletter readers bullish (AAII). So, which do you believe? The ones who tell you what to do, the newsletter writers, or the ones who supposedly follow their advice, the newsletter readers. At any rate, the NYSE has yet to confirm the Industrials and is encroaching the 200-day moving average from the south much less the prior reaction high. Ditto on most other major averages still below prior reaction highs. Dow is on its own for the time being.