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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: tradermike_1999 who wrote (2719)	3/31/2001 2:48:05 PM
From: Scott Bergquist	Read Replies (1) \| Respond to of 74559

Hey, my cousin works at the "National Lampoon" company you mentioned...one of the officers listed in the profile (Duncan Murray). I agree, when it got "hot" I could not understand why. My "signature bubble" company had the symbol NETJ. It had no revenues, no sales, no income. Just basically four guys with a Marina Del Rey address in L.A., who were standing by, waiting to apply their expertise in the dot.com world. Yet the market cap was in the millions, and it was trading 50k shares a day! Nevertheless, I could not resist putting my "cash" to work during 2000, even though in February I said, "ridiculous, this is a HUGE bubble...cash is king!" I am sure I am like many, many others.

To: tradermike_1999 who wrote (2719)	4/1/2001 12:59:17 AM
From: kirby49	Read Replies (1) \| Respond to of 74559

Mike: I agree with what you are saying and my answer for the long side is gold. However with reference to this Most people still don't realize what a bubble it all was and are buying or holding now in desperate hope as their accounts sink into oblivion. Or worse they buy from CEO's like Larry Ellison while they sale. Some suckers were buying HIS stock when he was dumping nonstop trying to abandon ship. The greatest transfer of wealth in history - from the individual investor to the CEO's and Wall Street chieftains. I judiciously use stops so don't get too suckered too often any more but think a good rule we should think about is to follow the money!. Where has lounge lizard larry and all his fellow crony and like linked individuals such as all the execs and directors of all the dot.coms put their money. Anyone have any answers out on the thread? Regards Bob

To: tradermike_1999 who wrote (2719)	4/5/2001 5:48:36 AM
From: MeDroogies	Read Replies (3) \| Respond to of 74559

Well, I would not agree that the recent bubble was based on the extension of credit. However, it is an easy assumption to make. I think there were many factors leading to this one. Not least of which was the reduced cost of investing and the expansion of the investing "audience". Most people (even now) view their investment accounts as their savings account. Quite a change from 10 years ago. And not even necessarily a good idea. Even as I had money parked in the bank, I had friends screaming at me how stupid it was with equity returns of 20+%. I believe in balance. Most people don't. That doesn't make them wrong...just less risk averse. As for "knowing" when there is a bubble. Well, I agree that it COULD be common sense. I tend to lean on the lemming condition...if I see EVERYONE running into something I consider speculative - there must be something I'm not interested in there. LINUX was particularly funny because it had NO SHOT at ever getting the returns MSFT did due to its open structure. It couldn't create a monopoly in the form of MSFT. Yet people wanted to believe it could. Still, Kudlow isn't wrong. Speculation is necessary for the liquidity of markets and fluidity of transfers. Therefore, there is technically no such thing as a speculative bubble. It is possible to point to one and describe it after the fact, but there are few technical means of determining one while you are in it, and there are even fewer to explain it after the fact. Manias, Panics and Crashes did indeed point to the extension of credit for the creation of several bubbles. But it wasn't effective in giving guidelines for avoiding them, or even knowing when they are occurring. As a result....it is useful as an ex post facto tool of comparison, but not as a guidebook. Where it IS useful is from the standpoint YOU used - common sense. However, before you can use that....you have to define common sense. I don't think that represents a feasible standpoint from which to build a case. My common sense is not yours, nor is it my neighbors'. I think your basic assumption is correct - there are ways to tell (as I've said, I didn't put a dime in a dot com, and advised my father in law to avoid AMZN, RHAT, and YHOO [he invested in YHOO at 200...and felt sorry afterward]) if you are astute and willing to take a leap of faith of common sense against common wisdom (if everyone is buying - why shouldn't I? Because it's against my better judgement). By the way, there is a portion of Manias that I DID use. One thing that was clear throughout the book, is that GOOD COMPANIES will survive, and always do well EVEN AFTER the bubble bursts. That is why I have focussed my investments on AOL, GE and ORCL. Solid companies, solid positions in their industries.