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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: Now Shes Blonde who wrote (6806)	1/25/2002 5:56:13 PM
From: isopatch	Respond to of 36161

Thx for sharing. Understand your take on risk in the markets. Think you are wise to be careful. I've worked actively in quite a few Bear Markets. It's well know that risk/reward ratios change considerably during Bear Markets but not entirely for the reasons that the public believes. And one of the reasons, that's very seldom discussed, is the change in the mix of players. In the 2nd half of every bull market it's easier to make money because so many inexperienced investors and traders are around to take the other side of every trade. OTOH, since March 2000 and especially during the past 9 to 12 months, we've been in a situation where a large %age of those players have either lost their capital or just threw in the towel while they still had some left. As a result, the mix of players active in the markets during the past contains a much higher %age of professionals who the remaining "civilians"<g> are competing against. Much tougher market. Shorter rallies. Lots of wip saws. MMs get meaner....yada yada. Truth is professionals don't like competing against eachother either. In the Bull phase of the cycle it's easier - with lots of novices out there - to run up you positions allowing both longer holding periods and greater %age gains. That's why, when the easy marks have been culled out of the trading crowd, you'll find most pros (except for short selling specialists), adopting a standard Bear Market strategy of carrying higher cash levels than would be the case in a Bull market. Once again, because your instincts are correct about the risk level for average investors, you're going to be a survivor to prosper in the next Bull Market vs the 10 of thousands of public participants - far less perceptive - that get blown out of the box in every down cycle.. Best regards, Isopatch