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Strategies & Market Trends : Intraday Updates, Analysis & Strategies for Daytraders -- Ignore unavailable to you. Want to Upgrade?

To: Jenna who wrote (277)	3/14/2001 6:49:52 PM
From: puborectalis	Read Replies (1) \| Respond to of 589

Fidelity blamed for tech crash By Craig Tolliver, CBS.MarketWatch.com Last Update: 6:16 PM ET Nov 27, 2000 BOSTON (CBS.MW)—Playing the blame game, FreeEDGAR.com pointed the finger squarely at Fidelity Investments Monday for the market's third-quarter tech-astrophy. "As technology and telecommunications stocks crashed in the third quarter, the nation's largest mutual fund complex was selling them aggressively," the firm wrote in its SECrets Newsletter. Fidelity parent FMR Corp. sold more than $1 billion each of stock in market leaders such as Nokia (NOK: news, msgs), Vodaphone and Nortel (NT: news, msgs), and more than $500 million each of Lucent (LU: news, msgs), EMC (EMC: news, msgs) and JDS Uniphase (JDSU: news, msgs), according to Alpha Equity Research, which tracks Fidelity funds for institutional investors. "As the single largest player in the stock market, accounting for an estimated 15 percent of total volume, Fidelity Investments undoubtedly contributed to the market rout," FreeEDGAR said. FreeEDGAR mines the Securities and Exchange Commission's database of filings and registrations and makes them available to investors on their Web site. As an "insider," Fidelity must file a quarterly statement of holdings, Form 13F-HR. "FMR cut their Nokia stake in half in the third quarter. At the end of June they owned 101.7 million shares. At the end of September they had 50.2 million shares. At the end of June Nokia was selling at about $50 a share, (FMR) started selling in July, the stock got down to $37 in the first week of August and then it rallied up a little," FMR President David O'Leary told CBS.MarketWatch.com. "Then the sell pressure came in again in late September, their stock traded down to $40 and then collapsed in October to $27 dollars a share—which is probably when Fidelity stopped selling." Ignore this User \| Report Abuse Fidelity to blame by: toypoop 03/14/01 09:39 am EST Msg: 10562 of 10569 For market crash. Mutual funds and declared institutional funds typically sell to their brokerages at lows and buy at highs. Take a stock like OPTV for example, Fidelity can sell its OPTV stock to an Fidelity Brokerage starting at say $16 to $13, traders with level II for example can watch Fidelity selling off at losses and so they go short. For Fidelity, it is simply a transfer of the same shares from one division to the other. This way, the price goes down to 13. Many dedicated longs sell off at huge losses (transferring their wealth to Fidelity). Once all that selling is over, Fidelity’s Brokerage will "sell" OPTV to Fidelity at higher and higher prices and restore the hypothetical $16 per share. By this Fidelity generates a lot from small investors, who had deposited their money in Fidelity, and from other shorts and longs scared or forced out. This is not untypical behavior for the large brokerages because they have the clout to pull it off. This market needs more diversification of the capital that drives it. I found this article below fascinating. I feel dealing with any brokerage that trades for their own accounts with such magnitude ( Fildelity controls 15% of the total volume in the markets) is against my best interests. Think about the volume of trading statistics and information they can gleen for their own use. Too much money in one basket IMO that in fact has affected the market. Kinda reminds me of the Hunts when they corned the silver market years back in a disjointed way. The point to me is that being able to control 15% of the volume in the market is way too much, yea it’s great when they’re buying but that much control is not a good thing and increases the volatility. It’s okay if you stick with mutual funds, but not as a trader. This year I cancel my Fidelity account.