To: craig crawford who wrote (114586 ) 1/6/2001 3:14:30 AM From: GST Read Replies (1) | Respond to Craig: Is there a crises or not -- that is the only real issue. A garden-variety recession is not a crisis. If that is it, we are fine to buy stocks, especially with the Fed in an easing mode. We had a one-day rally on that premise. We had a modest pullback on Thursday -- normal. No problem. But Friday was different -- the market openned amidst rumors of "crisis out there somewhere". To move forward, the market needs to be convinced that there is nothing out there lurking in the financial system. Friday, it was just too hard to figure it all out. That, combined with mutual fund selling (yes, they sell when there are redemptions), gave us that sickly sinking market. Now two things are needed. 1) Middle America needs to want to hold onto their mutal funds -- and they are very skittish (btw this is the selling to which I referred as only ten weeks old) and, 2)The investment commnity needs to satisfy itself that there may be dings and bumps and bruises, but nothing life-threatening which could screw the whole system in the form of a financial crises. A growing belief that there is no crisis will help mute the impact of mutual fund redemptions, although selling could be quite persistent. The liquidity from the Fed is designed to allow money to leave the market without tanking the market or the system -- AG is doing his job. If the "crisis" atmosphere abates, stocks can do exactly what you are saying - rally before a final fall. I am now slightly net-long on this logic. And ready to be all-long on Monday. The fly in the ointment could be Yahoo's earnings. But with luck any damage will be confined to the bubble stocks which you have avoided. Good luck.
