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Strategies & Market Trends : Pump's daily trading recs, emphasis on short selling -- Ignore unavailable to you. Want to Upgrade?

To: Michail Shadkin who wrote (6067)	11/19/2001 8:46:23 AM
From: rogermci®	Respond to of 6873

Appreciate your summaries...keep them coming on an intermittent basis. I think we're in a secular bear market which will be periodically interupted by some vicious bull rallies. I think the mistakes most shorts will make will be not respecting the intesity of such events because of bearish background fundamentals. I suspect the rally we are in is purely technical in nature but could carry further then most think. roger

To: Michail Shadkin who wrote (6067)	11/19/2001 6:49:37 PM
From: Brad Davies	Respond to of 6873

Michael, I agree with almost all of what you have to say, but for one aspect of your strategy. Specifically, those of your positions with which I totally agree are 1. valuation is the key, 2. the market is severely overvalued 3. In the short term, you cannot predict which way the market is going to go. From these principles, your strategy calls for allocation, which in your view means not being overweighted in any one stock, and in these times, shorting only specific types of opportunities with tight stops. In my experience, you cannot time the fall on the overvalued stocks. When they come, they resemble a waterfall, and getting a short position in place may be difficult. Thus, I take the approach that you do not overweight in any one stock, nor do you attempt to time the fall. Rather you take your position (using some technical indicators to hopefully avoid shorting to early, but one can never be sure), and wait. The wait may be long, and it will certainly be less exciting than trading, but I would be interested to see if anyone has taken an academic approach to the likely returns from a "short and hold" strategy vs. a trading strategy on the short side. I look forward to your thoughts. Brad