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

To: Ilaine who wrote (6299)	7/27/2001 12:13:03 AM
From: smolejv@gmx.net	Read Replies (2) \| Respond to of 74559

A tiny little story: I turned on my radar and went for all the gorillas (big-name, feel-good companies) with PE above say 50. Bought then - among others - AT&T puts. T at the moment is at the UFB PE of 92, and I think this is the trailing earnings' PE. Guess what - I sold them after a month at a loss of app 20%. Reason: some cash deal (I think Sprint or whoever is ready to let T cash in their broadband part of enterprise) and the firm belief in the big-name, feel-good fame of Ma Bell on the side of broad ownership. T is an example of a nest egg ("stick with AT&T, Joe, forget these highfliers"). Right, CB? Imagine there's a crash and nobody sells. dj

To: Ilaine who wrote (6299)	7/27/2001 2:41:10 PM
From: Mark Adams	Read Replies (2) \| Respond to of 74559

This comment from Chic In a sense, every dollar in the market has one foot into money heaven. suggests to me the only rational ones are the day traders who go home entirely cash every night. <ng> siliconinvestor.com MarketCap has one good use- that of ranking companies in terms of liquidity, in combination with volume. As mutual funds continue to grow in size, they require greater amounts of liquidity to move in the market without making waves. <rant on> This has the perverse effect of encouraging companies to grow in scale, regardless of the optimum size to meet particular market requirements. Companies that meet the mandate of growth are rewarded with higher stock prices and lower cost of capital. Companies that fail to grow eventually are left behind in the backwoods of the market. This trend, of mutual fund scale altering the economic landscape, probably creates as much distortion as that of indexing and closet indexing. <rant off>