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 : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (96438)	7/19/2002 8:33:17 PM
From: stockman_scott	Respond to of 99280

A patient bear sits on his cash Paul Desmond says there's still time to sell By William Hanley National Post Thursday, July 18, 2002 There's no way we can stand next to a bunch of insane people, Paul Desmond says, and tell when they're going to begin acting rationally. "But we can watch and when they stop acting acting irrationally, we can identify that." Desmond, a technical analyst and president of Lowry's Reports Inc., was on the phone from North Palm Beach, Fla., as the stock market was yet again doing its level best to drive investors mad with another tantalizing performance. The Nasdaq technology stocks led investors on a merry chase after soaring prices at the open in what we reckon was a minor episode of irrational exuberance followed by a bout of rationalism that drove prices into negative territory before they recovered somewhat to close 1.6% higher. Investor sentiment is Desmond's specialty, measuring as he does the supply and demand that reflects the buying and selling of investors. Many people who follow technical analysis have recently been keeping track of Desmond's research into identifying bear market bottoms and new bull markets to see if his conditions for a major turning point have been met. The quick answer, even with all this month's volatility, is no. Lowry's research has shown that almost all periods of significant market decline in the past 69 years have contained at least one, and usually more than one, day of panic selling in which downside trading volume equalled 90% or more of the total of upside volume plus downside volume, and points lost equalled 90% or more of the total of points gained plus points lost. Space does not permit a detailed review of this methodology, but suffice to say such 90% days represent irrational behaviour that occurs when investors are basically willing to get rid of stocks at any price just to be rid of them. Desmond says the market has come close to giving a 90% capitulation signal based on closing data. But not quite. Meantime, "the chance of making money in the market between now and the final bottom is low," even though there could be a rally in the fall before that low is ultimately reached. So what's an investor to do? "Investors need to look forward. Declines eventually offer investors the opportunity of a lifetime. "You must be prepared ... and have cash available when the bottom finally occurs. If you're nursing a badly beaten-up portfolio, you're not well prepared." So for Desmond, the answer is to sell, however painful that might be at this stage, get the cash and wait patiently. "You must get the psychology straight. Investors spend a lot time trying to get even. If they don't sell out, it could take 10 years." So what does someone with such a philosophy make of the "buy-and-hold" philosophy that became a mantra in the 1990s and still has adherents today? "Buy and hold is a fraud," Desmond says, "a concept perpetrated by mutual funds and brokers." It makes as much sense, he adds, as a Canadian saying he's going to wear a bathing suit every single day in the summer. Meantime, Desmond says summer rallies are really difficult to identify on a historical basis, being "more of a theory than a reality." Some rally is bound to occur in June, July or August, but it's more a case of statistical probability than clearly identifiable as seasonal. Even if one were to occur, he can't see the absolute low happening till price-earnings levels fall to where they've been at previous major market bottoms. The S&P is still trading at a trailing P/E ratio of well over 20:1, when the average major bear market low has been 10.5:1. Desmond, wearing his fundamental analysis hat, concludes that prices must fall and/or earnings rise substantially till stocks are priced attractively enough to trigger a new bull market. But he'll be ready when that does happen. © Copyright 2002 National Post nationalpost.com{41DC86D0-003F-431F-8CEF-C1AA08428F7F}

To: mishedlo who wrote (96438)	7/22/2002 10:58:06 AM
From: Ron Dior	Read Replies (2) \| Respond to of 99280

WOW the firts hint that Ron could be wrong.! I am simply invested in the market unlike most. Why does this bother you so much? What will it take for you to admit you are wrong. If I was wrong I would admit it. When will you admit I am right? Not once have you answered what it takes to convince you that LONG IS WRONG. I was convinced during the bubble so I decided to start investing in real estate instead. Give me another bubble and you would have your chance to make me see the light. Eventually at ZERO you will be forced to admit it. Is that where you think this market is headed? Perhaps when BRCD falls to $5 you will waver. This proves that you have no idea what I am about. If BRCD fell 25% below my cost basis it would be gone regardless of the situation. No love loss here...Ever BRCD should be OK. Do you want to know what bothers many of the bears on this thread about me? Most that attack me are upset due to either pride and or frustration. Though these ones are so certain this market is going to hell yet they aren't making any money. They are chasing the wind, trying to short the spikes or maybe buy a dip here or there. Either that or they are so petrified of what will happen during this downturn that they are sitting on their hands and their money while KNOWING that they should be short. How frustrating it must be to be RIGHT but yet too afraid to make any money on this knowledge! Believe me when I tell you that if there wasn't a large payoff in what I am doing then I wouldn’t waste my time. I am not here to be RIGHT like many on this thread. I follow this thread because I like to see and know first hand what the pessimists think. MUST READ BELOW: You cannot make money without risk. You got that? By trading in and out or by sitting in cash you are trying in essence to overt or escape your risk. Doing this will never make you a dime worth holding and eventually put you in either Butler or bankruptcy court. Ron Dior