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Strategies & Market Trends : The Options Box -- Ignore unavailable to you. Want to Upgrade?

To: dli who wrote (7495)	11/19/2000 4:56:17 PM
From: chic_hearne	Read Replies (1) \| Respond to of 10876

Dave, Excellent points also. I'll add a few. - soft landings are an urban legend, they don't happen. - markets don't go from grossly overvalued to fair value. History has shown that when things fall apart, markets must first become undervalued before a recovery is possible. - the Naz isn't going to bottom until levels are reached that people aren't even willing to discuss yet. People have to hate tech and not want to own it before a bottom is in place. - the bottoming process could take years. It's entirely possible that the Naz will get back above 4000 before a bottom happens. Markets don't go straight down. - leverage is a double edged sword. Big tech has been artificially inflated because "investment" income has been allowed to be added to the bottom line thus distorting P/e ratios (such as CSCO, INTC, MSFT, etc.). YoY comparisons are going to look terrible for many of these companies even if business is good simply because these type of gains on speculative stocks won't be repeated. Look at INTC, how good will YoY comparisons look when they have taken anywhere from $.725 to $2.3 billion in these type of gains every quarter this year? "Those that don't study history are doomed to repeat it, those that study history but ignore its consequences deserve to repeat it." chic

To: dli who wrote (7495)	11/19/2000 5:44:08 PM
From: Poet	Respond to of 10876

Dave, You've provided us with some wonderful posts in the past 24 hours. Thank you so much. I'd like to address a couple of points: First, I have a hard time understanding this widespread urge to bottom pick because that's where the most money is lost but then again I'm always glad to find people that are willing to take the other side of my trades. People have a difficult time adapting to changes in the environment, particularly when the strategies they've been using have been wildly successful. In experimental psychology, it's called the "variable interval" reward pattern (one where the player's rewards are given randomly but regularly) and it is very difficult to extinguish behavior rewarded in this fashion. they prefer to blame their losses on a variety of external factors ranging from "MMs manipulating prices" to claims that TA has stopped working . Agreed on the MM manipulation scenario. People tend to shift blame from themselves, particularly to authorities' organized efforts, when things go wrong. IMO, this is why we're seeing the birth of so many conspiracy theories linked to our election debacle. and last, If you choose options to daytrade just because of the leverage they offer then you're probably taking on too much risk in the first place. Amen to that. This is precisely what I've discovered during my own attempt to redesign my trading style to meet current market conditions. Less trading and smaller trades, most likely on equities, until the market begins to trend again are the ways I'll try to play it. Thanks again for your input.