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Technology Stocks : IDT *(idtc) following this new issue?* -- Ignore unavailable to you. Want to Upgrade?

To: Arrow Hd. who wrote (22946)	1/2/2001 5:14:15 PM
From: 613	Read Replies (1) \| Respond to of 30916

I can see high PE companies getting killed but how many of the companies that are going down are selling for significant % below cash?

To: Arrow Hd. who wrote (22946)	1/3/2001 2:26:00 AM
From: Herschel Rubin	Respond to of 30916

ArrowHD, I tend to agree with your explanation for today's market dynamics (causing the Nasdaq to go down 7.22%) and I'll add this suggestion because I've heard from other investors who thought along the same (albeit incorrect) line: -> Investors were selling because they incorrectly thought they had "maxed out" on their Y2000 capital loss limitation of $3,000 per year and they had further losses they wanted to apply to Y2001. Little does the average investor know that the $3,000/year loss limitation ONLY applies against ordinary income AND it is carried forward from year to year. So they could have taken ALL their losses in 2000 if the timing was right and applied $3,000 against Y2000 income and another $3,000 against Y2001 income. However, capital loss carryovers of any amount can be carried forward to be applied against future capital gains. I'm often surprised by how many people are unaware of capital gains/loss rules. Because this misperception is prevalent amongst the masses, some of today's selling may have been just that. And because there weren't enough significant negative pre-announcments to warrant a decline of today's magnitude, I would venture that the 7.22% drop in the Nasdaq was related to tax-related portfolio tampering, in addition to the following already mentioned here: 1) Continued margin selling as stocks hit 52-week lows. If anything, this decline has washed out many over-extended margin players. It's a healthy process. 2) As ArrowHD said: "Meanwhile the shorts held onto their 2000 profits while the market tanked." If I were short and I saw how the market was behaving mid-morning today, I, too, would have been inclined to go with the trend to optimize profits also. When the markets turn around in the next few days, there may be a large amount of latent buying power generated by short covering that will cause a decent rally. 3) Then release of the Nat Assn or Purchasing Mgrs (NAPM) report at 10:00 a.m. triggered the decline. So the herd began thinking we've got a recession on our hands. The interesting thing is that in a true recession, the stock market is usually a lagging indicator, not a leading indicator. This market action has been telling us we have had a tech inventory hiccup, coupled with rising rates and rising oil prices which have stabilized and may head down. Yet we've got high employment and relatively low inflation. But not a recession.