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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (36139)	4/21/2001 6:13:33 PM
From: t2	Read Replies (1) \| Respond to of 65232

There is an interesting thing to keep in mind about Hedge or Short Funds. When mutual funds decline, the individual holders are not quick to bail out. They are taking a long term perspective. However, hedge funds have been attracting money from disgruntled longer term holders and those that are interested in profiting from actively trading funds for a short period of time. I am talking more about hedge funds that lean more short than long. Given that Short Funds holders are more likely to have a shorter time horizon: What would happen if the Nasdaq goes up 30% in a matter of weeks? -----Redemptions!!!! -----leading to covering by funds to raise cash. (if someone has made a fortune recently in such funds, it may be time to take the money and run!) I bet it starts happening in a big way ...right now as people see how much was lost and how fast. Now there are rumors of hedge fund problems and that can only mean that they are short Nasdaq stocks. If one or two of these exit the market, and return any cash to unit holders, the move up in the market may be huge. Another 10% on the Nasdaq may put some out of business, IMHO. Hedge Funds and more importantly Short Funds' will have a big outflow for a long period of time as the performance keeps getting worse and worse...remembering that a large base of Short Fund "investors" are there for the short term (unlike mutual fund holders) or until they get a sense that the market has bottomed. ...and the point I made about people wanting to take profits from such funds quickly, learning their lessons from what happened to holders of momentum techs funds on the way up and then on the way down. My prediction is that the market is going to rally, partly from mutual funds having too much cash and secondly from money being moved from hedge/short funds to mutual funds; hedge fund liquidations; few IPOs; company share buybacks; maybe even improving fundamentals. Given that the short interest is quite high in most Nasdaq stocks, there is a good chance for continuing major momentum in this market. I was thinking mid 2000s is a short term target but am now starting to to think 3000 is going to be no big deal. Monday will give us some clue as what was happening on Friday. My guess is that the market rebounds big and was held down for options expiration. I bet the holders of short positions are a lot more nervous than those holding longs in tech stocks and will be scrambling to cover--refering to traders only. BTW--in reading big cap tech company earnings reports, I see a fair amount of share buybacks. They have no reason to announce buybacks if they are already in progress. Another bullish sign for tech stocks.

To: stockman_scott who wrote (36139)	4/22/2001 12:50:30 PM
From: Jim Willie CB	Read Replies (1) \| Respond to of 65232

I think much of this rally was absolutely essential for the hedge funds to slowly exit their disastrous positions... this summer might be an economic nightmare climax, leading to serious questions on the end being in sight these hedge funds scare the crappola out of me... such huge amounts of money, and even greater degrees of leverage... a big NYC bank or NYC brokerage house could easily fall victim to risky failed gambles watch for the stall in the next few sessions, few days, or few weeks my guess is sooner rather than later esp with most averages above the 50dayMA evidence should be clear as a bronze bell / jw