Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: Kanetsu who wrote (54764)	8/31/2001 12:48:37 PM
From: Investor Clouseau	Read Replies (2) \| Respond to of 57584

>>Also, I don't buy your theory that the tail wags the dog, that the economy is dependant on the stock market. I don't know the statistics, but I guarantee you that in the 20s only a small % of people held stocks. << If so few people owned stocks in the '20's, then how did we end up in a depression? IMO, it proves the point that the stock market leads the economy. IC

To: Kanetsu who wrote (54764)	8/31/2001 1:08:28 PM
From: Frederick Langford	Read Replies (1) \| Respond to of 57584

Look at some of the good money managers like Buffet and Weitz, they are not suffering because they never got involved in this craziness. I believe Buffet had a lousy last quarter, and he also missed a huge amount of money to be made from 1998 to 2000. Smart money managers played the bubble than sold their stocks and took their gains exactly as Rande and Brinker advised. Fred

To: Kanetsu who wrote (54764)	8/31/2001 2:39:28 PM
From: Rande Is	Read Replies (3) \| Respond to of 57584

Kanetsu, I did not say it is your patriotic duty to not short-sell. Why would I say such a thing? We've been short-selling here a long time. For the record: I placed short-sell recommendations on plenty of stocks here when techs were flying high. I tried promoting short-selling last September/October. . .even sent many readers over to follow Sharck's short-selling board. . . but I was boo hoo'd for my bearishness. . . by December of 2000 I said I was cutting back on my short-term trading anyway [see Money magazine article]. . . and began discussing the general markets more and individual plays less. . . [I quit posting my short-sell candidates publicly altogether. . .and have not desired to go back to short-term trading all year long. . . not liking the market environment]. . . In a "regular" market, short-selling is important to give the market liquidity. Granted. But when you are teetering on the abyss, the market is hardly regular. I did not build the house of cards. . .nor did any other trader. Yes, corporations became highly overvalued. This is not unusual and is what makes the market cycles. . . .the ebb and flow. . . which is normal. Again, short-selling during a normally functioning market is healthy. But my discussion is not about a normally functioning market. The discussion is about the sort of chain reaction which could take place if short-sellers, who are clearly in control of the current market. . .decide to get greedy and ignore the fact that the economy keys off the markets. . . so they drive down the markets beyond the April 4 low. . . beyond any number that seems reasonable. . until the markets are entirely oversold. . . investors are no where to be found and an economic recession becomes mandatory. [or if SEC is successful in cancelling the Short-Sale Rule, which would make taking stocks to zero a far quicker process] Remember that corporations receive financing based on the value of their stocks. Make them worth nothing, they can no longer attain financing and they have no chance of surviving. The resulting layoffs when companies must cut back due to a declining stock market are what take down the economy. I am not making this stuff up. This is basic economics. It is all cause and effect. It was irresponsible of us to drive stocks through the ceiling, then stand there asking for more. Likewise, it is irresponsible to drive them down 95%, and not be satisfied. . . looking for more profits off the backs of failing companies. . . that is the un-American part, IMO. I agree completely with you that high PE ratio stocks are not worthy of our investment. And there is a sort of survival of the fittest that kicks in. But there needs to be a point where enough is enough as well. When a stock has lossed 95% of its value, should we continue applying short-sell pressure and continue to drive them lower and lower? Or should there be a point at which we are to let go? Most American brokers don't allow shorting under $5. But offshore accounts and larger onshore accounts will allow shorting of ANY stock at ANY time and ANY price. Perhaps a Mercy Regulation should be adopted. A stock losing 90% of its value during in a 12 month consecutive period could be restricted . . . .for instance, the symbol changes to "R" [restricted] status, meaning no short-selling whatsoever for 6 months or until the value returns to a specified point. This way we would not reward traders for driving stocks "ALL THE WAY" zero. . . this would be a sort of stop gap for the sort of slide that leads to crashes and ultimately to severe recessions. Again looking at the 20's and 30's, it was NOT the margin buying that caused the depression. That merely caused the crash of 29. It was the unrestricted short-selling of companies one-by-one down to zero. . . like shooting fish in a barrel. There were no investors, so the short-sellers could move stocks at will. It took 2 1/2 years before the market finally hit bottom. All I am saying, is that we should take a lesson from history. I seem to be the only one saying this. Perhaps that fact is what worries me most. For the record, I believe that buyers WILL step up to the plate come October. But I am preparing for the worst case scenario, while I am planning for the best. Rande Is