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 : Trend Setters and Range Riders -- Ignore unavailable to you. Want to Upgrade?

To: Connor26 who wrote (19429)	6/14/2002 12:07:44 AM
From: KevinThompson	Read Replies (1) \| Respond to of 26752

Please forgive me for preaching, but I've learned through painful experiences myself to always always always do a hedge immediately upon entering any position. If I buy stock, I buy a put. If I short stock, I buy a call. Just common sense. Especially holding anything overnight, you just can't be certain that Osama Your Mamma won't slam another plane into a state landmark somewhere. A hedge will save you from disaster. If disaster strikes, you can then sell the hedge, recoup most of your loss, and still keep your stock. Alternatively, if it's close to expiration with little or no time value left, just exercise the option and close out the position. Just my 2 cents, Best Regards, KT

To: Connor26 who wrote (19429)	6/14/2002 12:22:51 AM
From: Susan G	Respond to of 26752

Whatever Happened to the Recovery Rally? There is a recession pattern to the stock market. Prices fall going into a downturn, but turn up before the recession ends and then leap once it is over. From 1938 on, an investor who bought the stocks in the Standard & Poor's 500 six months before a recession ended, and then held on until six months after the end, always did well. In fact, the return over those years averaged 27 percent, and that figure does not include dividends. Determining when a recession would end was not easy, of course, but an investor who managed to do that was sure to prosper. Until now. This time, what is usually the sweet part of the cycle for investors has turned sour. If, as appears likely, this recession is eventually determined to have ended in December, it will have been the first one with a market decline in the final six months of the downturn. There was a rally late last year, but it died young. This recovery will be six months old in two weeks, but you wouldn't know it from the S.& P. 500, which is off 12.1 percent this year. The interesting question is what that means. To some bulls, it shows that the market is a little slow to pick up on the improving economy. With an accounting firm on trial and two chief executives of formerly highflying companies being arrested, this has not been a month to renew confidence in the financial markets. Once the uproar settles down, they say, investors will be reassured by the rising profits and will start bidding up stock prices. A less encouraging reading comes from Greg Jensen of Bridgewater Associates, a money management firm. The way he sees it, "the market is pricing in a rapid recovery in earnings," but even that recovery is not enough to offset the fact that many of yesteryear's market leaders, particularly in technology, are still overvalued. "The fact that the turn in earnings and the economy has come and gone without an equity rally is an indication of how bad the post-bubble hangover is," he said. Hangovers mostly affect those who were drunk. Smaller companies, of the nontechnology variety, were generally ignored in the boom. So were many solid larger companies, the ones that investors rely on for dividends rather than for the hope of big capital gains. The Dow Jones transportation average, dominated by economic-sensitive stocks in the rail and trucking industries, is up 2.5 percent this year. And, reports Howard Silverblatt of the S.& P., the 351 dividend-paying companies in the S.& P. 500 are, on average, up a little this year. It is the others that have dragged down the average, with an average decline of 17.6 percent since Dec. 31. That drop is not an indictment of the recovery, which is weak but not about to end. Instead, it reflects the valuation excesses of the bubble era, which have been reduced but not eliminated. Usually, stock valuations are low by the time a recession nears an end, but that did not happen this time. That fact made it harder for the market to recover when the economy did. nytimes.com